Since FLTCIP premiums are set to increase significantly as of January 1, 2024, you may want to consider purchasing long term care (LTC) insurance from a private-sector insurer. Then again you could take the risk of not paying for any LTC coverage at all.
The Big Question: Do You Really Need LTC Coverage?
The short answer: “Yes!” According to LongTermCare.gov, someone turning 65 today has a near 70% chance of needing some type of LTC services in the future. Since FEHB and Medicare do not cover non-medical custodial care, you’ll have to pay out of pocket for assistance with day-to-day activities like dressing, bathing and using the bathroom. With the average cost of a private room in a nursing home running $8,000 per month or more, the cost of LTC insurance is well worth the money.
“Of course, the amount that’s tax deductible depends on factors such as your age, total medical expenses and the policy you’ve selected.”
The Good News: LTC Insurance Premiums Are Tax-Deductible
Since long-term care insurance premiums are tax-deductible in most cases, it’s something to consider when budgeting for the cost of coverage. Of course, the amount that’s tax deductible depends on factors such as your age, total medical expenses and the policy you’ve selected. According to the Internal Revenue Service (IRS), these are the current age-related deduction limits:
- If you’re under 40 years old: the IRS generally considers your LTC premiums as a qualified medical expense and you may be eligible to deduct a portion of these premiums as an itemized deduction. However, the deduction amount is subject to a cap, which is adjusted annually. Currently, the deduction cap for people under 40 is $450.
- If you’re between age 41 and 50: the IRS currently allows you to deduct a slightly higher amount of LTC insurance premiums as a qualified medical expense. The maximum deduction is currently $850.
- If you’re between age 51 and 60: the IRS currently allows you to deduct up to $1,690 in long-term care insurance premiums as qualified medical expenses.
- If you’re between age 61 and 70: the IRS currently allows you to deduct up to $4,520 in premiums.
- If you’re age 71 or older: the IRS currently allows you to deduct a maximum of $5,640 in long-term care insurance premiums as qualified medical expenses.
Since IRS deduction limits are subject to change each tax year, check the IRS guidelines for the most up-to-date information when you’re preparing your tax return.
Consider connecting with an FRC® trained advisor who can help you compare insurance products that can cover your LTC needs.
Source: https://apps.irs.gov/app/vita/content/00/00_25_005.jsp
