As we get older long term care insurance premiums can become expensive. To qualify for a deduction on the insurance costs the policy must be a “qualified policy” as defined by the IRS.
A qualified policy is one issued after January 1, 1997 that adheres to certain regulations established by the National Association of Insurance Commissioners. Policies purchased before January 1, 1997 may still be treated as “qualified” if they are approved by the insurance commissioner of the state where it was sold.
If you policy is qualified then premiums are treated as un-remibursed medical expenses for income tax purposes. To qualify for the deduction of the premiums these un-reimburesed medical expenses must exceed 7.5 percent of the adjusted gross income. In determininging whether you meet the threashold you can use the lesser of the premium paid or the value. If on 12/31/2008 you are:
– 40 or under, the maximum portion of your long term care insurance premium considered “health insurance premiums” is $310.
– Between 41 and 50, the maximum portion of your long term care insurance premium considered “health insurance premiums” is $580.
– Between 51 and 60, the maximum portion of your long term care insurance premium considered “health insurance premiums” is $1,150.
– Between 61 and 70, the maximum portion of your long term care insurance premium considered “health insurance premiums” is $3,080.
– Over 70, the maximum portion of your long term care insurance premium considered “health insurance premiums” is $3,850.