A 2.5% increase; When income stops and medical expenses commence
October 23, 2015. Los Angeles, CA — The American Association for Long Term Care Insurance, a national trade group, announced approval of increased tax deductions for long term care insurance policies purchased in 2016.
“This is outstanding news for millions of Americans who own or are considering long-term care insurance,” explains Jesse Slome, executive director of the American Association for Long Term Care Insurance .The increase amounts to about 2.5 percent compared to the prior year.
“Tax advantaged long term care insurance remains one of the few remaining significant tax-savings benefits especially meaningful for small business owners,” Slome explains. “While deductions may not apply for individuals who are still working, they often can be taken during retirement when income stops and medical expenses often occur.”
The 2015 and 2016 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 2015 2016
40 or less $380 $390
More than 40 but not more than 50 $710 $730
More than 50 but not more than 60 $1,430 $1,460
More than 60 but not more than 70 $3,800 $3,900
More than 70 $4,750 $4870
Source: IRS Revenue Procedure 2014-61 (2015 limits) and 2015-53 (2016 limits)
In addition, according to Slome, the per-diem limitation under Section 7702B(d)(4) for periodic payments received under a qualified long term care insurance contract for 2015 increases to $340 (the 2014 limit was $330).
The American Association for Long Term Care Insurance is the national association serving insurance and financial professionals who provide long-term care financing solutions. Visit http://www.aaltci.org