IRS Announces Increased 2013 Deductibility for LTCi

Tax Change Preview: 2013

BOSTON, MA.  – The Internal Revenue Service (IRS) announced increased deductibility levels for long-term care insurance policies purchased in 2013.
“For taxable years beginning in 2013, the limitations have been increased,” explains Jesse Slome, executive director of the American Association for Long-Term Care Insurance (AALTCI), the industry’s trade association.  “Tax advantaged long-term care insurance remains one of the few remaining significant tax-savings benefits especially meaningful for small business owners.”
The deductible limits under Section 213(d)(10) for eligible long-term care premiums includable in the term ‘medical care’ are as follows:
Attained Age Before Close of Taxable Year       2013 Deductible Limits         2012 Deductible Limits
40 or less                                                                       $360                                $350
More than 40 but not more than 50                               $680                                $660
More than 50 but not more than 60                               $1,360                             $1,310
More than 60 but not more than 70                               $3,640                             $3,500
More than 70                                                                 $4,550                             $4,370
Source:  IRS Revenue Procedure 2012-41 (2013 limits) and 2011-52 (2012 limits)

Tax advantaged long-term care insurance remains one of the few remaining significant tax-savings benefits especially meaningful for small business owners

For calendar year 2013, the per-diem limitation under Section 7702B(d)(4) for periodic payments received under a qualified long-term care insurance contract is $320 (the 2012 limit was $310).
The American Association for Long-Term Care Insurance (http://www.aaltci.org/) is the national association serving insurance and financial professionals who provide long-term care financing solutions.  A complete explanation of tax deductible rules for individuals and business owners can be found on the Association’s website:  http://www.aaltci.org/tax .