The deduction of tax qualified long-term care insurance policies was increased for 2020. Thus the long-term care insurance deduction can be considered a retirement subsidy. However, you need to check if your newly purchased long-term care insurance policies offers indeed the tax deductible opportunity. Other tax deduction including medical expense deductions.
For 2020 the LTC or Long Term Care insurance deduction limits changed. A couple age 70 or older who both have the right kind of long-term care insurance policy can deduct as much as $10,860 in 2020. In comparison the tax year 2019 limit was $10,540. Important: This is only available to tax-qualified health-based long-term care insurance policies.
Note: If you require long term care it might be tax deductible. This long term care must be medically necessary e.g. for preventive, therapeutic, treating, rehabilitative, personal care or other services. More about this here Medical and Dental Expenses (Including the Health Coverage Tax Credit) for a full list of qualifying services. Generally, the cost of meals and lodging at an assisted-living facility or nursing home is included if reason for being there is to get qualified medical care.
In comparison, linked-benefit Long Term Care or LTC policies such as life insurance and or annuity policies with long term care benefits in most cases DO NOT qualify for the insurance or premium tax deduction.
In most cases, if a taxpayer purchases the Long Term Care insurance before retirement the tax deduction does not apply or the taxpayer does not reach the threshold to deduct the LTC premium. In comparison, after working on with the start of retirement taxpayers can benefit more likely from this tax deduction. Again, check with the insurance carrier to be certain about this tax deduction.
Similar to the tax deduction Like the deduction for long-term-care services, the long term care insurance premium is an itemized deduction for medical expenses. Check on the given threshold by tax year etc.
Itemized Deductions via Schedule A
Medical Expense Limits
Attention: If you are self-employed you might be able to deduct premiums paid for long-term-care insurance as an adjustment to income without having to itemize.
LTC Tax Deduction Limits for Long Term Care Insurance
Age 40 or Less
Age 40 plus - less 50
Age 50 plus - less 60
Age 60 plus - less 70
Age 70 plus