|
Type of Taxpayer |
Deduction for LTCi Premium |
Taxation of Benefits |
|
Individual Taxpayer who does not itemize |
No Deduction |
|
|
Individual Taxpayer who does itemize deductions
|
Treated as a medical expense.
Limited to the lesser of the actual premium paid of the maximum allowable premium per person from the age based table below.
|
Attained age at close of tax year |
2010 Eligible
Premium Limit |
|
40 or younger |
$330 |
|
41 through 50 |
$620 |
|
51 through 60 |
$1230 |
|
61 through 70 |
$3290 |
|
71 and older |
$4110 |
The eligible premium paid for the individual taxpayer and his/her spouse may be deducted to the extent that total medical expenses for such persons exceed 7.5% of adjusted gross income (AGI). |
Reimbursement benefits for qualified long term case services are not taxed, regardless of whether premium was deducted or not. |
|
401K Plans |
May not be paid through 401K retirement accounts. 11 |
|
|
IRA Owners |
Individual Retirement Accounts may not be used to pay LTCi Premiums |
|
|
MSA / HSA Owner |
Taxpayer may pay for LTCI premiums from a Medical Savings Account (MSA)1 or beginning 2004, from a Health Savings Account (HSA) up to the allowable premium per chart above.
|
Benefits received from an Indemnity, Per Diem or
Cash Benefit policy are not taxed,
regardless of whether premium was deducted or not. Except those benefits that exceed the greater of:
· The actual LTC expense
incurred or,
· $290 per day in 2010and
adjusted each year for inflation. |
|
Section 125 Plans |
LTCI premiums become taxable to employee if paid through Section 125 plan. 11 |
|
|
Employees |
· Premium paid by employer.
· Deductible 100% as business expense by
employer. 2,9
· Not taxable income to employee. 8,9
· Premium not limited to age based maximum
deduction.
· Applies to individual and group LTC insurance. |
|
|
C Corporation Owner |
If owner is a corporate employee, then treated as employee. 4 |
|
|
Other Business Owners
· Sole Proprietors
· S Corporation
2% or more owner
· Partnerships and
Limited Liability
Partnerships
· Limited Liability
Corporation Owners |
Treated as a business expense for medical insurance premiums.12
Limited to the lesser of the actual premium paid or the maximum allowable premium per person
from the age based table below.
|
Attained age at close of tax year |
2010 Eligible
Premium Limit |
|
40 or younger |
$330 |
|
41 through 50 |
$620 |
|
51 through 60 |
$1230 |
|
61 through 70 |
$3290 |
|
71 and older |
$4110 |
|
|
