Individuals often overlook the potential tax saving benefits available to those purchasing long-term care insurance according to the American Association for Long-Term Care Insurance (AALTCI).
"There can be significant tax-saving benefits available if you understand the rules and the limits," explains Jesse Slome, director of the long-term care insurance organization. "The tax deductibility generally is not a benefit when one applies for this coverage but in later years, typically after retirement, the tax deductibility can be of enormous value."
Premiums paid for most traditional long-term care insurance policies count towards meeting deductible limits for medical and health-related expenses. "Today, linked-benefit products, life insurance policies that offer a potential long-term care benefit may offer some similar benefits."
The Association has just posted a webpage showing actual tax-deductible benefits for linked-benefit as well as traditional long-term care insurance policies. "Some linked benefit products offer no benefit," Slome notes. "With others a portion of the premium paid may count towards the tax deductible limits."
According to the examples, a couple who are both age 60, could each buy coverage that would pay $162,000 of benefits when care is needed. The yearly combined cost for coverage would be approximately $2,572. "The full amount of the premium paid would count towards the medical tax deductible limits," Slome explains. "After retirement, many seniors find they are more likely to qualify for medical-related deductions and that's when the tax deductibility of LTC premiums is a significant value."
By comparison, the examples looked at three different hybrid or linked benefit products. "For one company's product, none of the premium would be deductible," Slome points out. "A second company offers a policy with a 10-pay premium costing $17,510 each year for the next 10 years. Of that amount, some $1,627 would count towards the tax deductible limit amount."
"A good long-term care insurance specialist can help compare policy costs and explain what portion may be tax deductible," Slome advises. "That's your best route to getting this important protection."
The American Association for Long-Term Care Insurance (AALTCI) advocates for the importance of planning and supports insurance professionals who market both traditional and hybrid LTC solutions. To obtain long-term care insurance costs call the organization at 818-597-3227 or visit their website at www.aaltci.org.