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IRS Increases 2015 Tax Deductions for LTC Insurance

11/19/2014

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Long-term care insurance policyholders who qualify will be able to deduct more of their premiums in 2015.  The IRS has increased by about two-percent the amount of Tax-Qualified LTC insurance premiums considered an Eligible Medical Expense.

The age-based, "Eligible", deductible premium limits for tax years 2014 and 2015 are: 

Age by end of Tax Year
Age 40 or less
Age 41 - 50
Age 51 - 60
Age 61- 70
Age 71 and older
2014
$   370
$   700
$1,400
$3,720
$4,660
2015
$   380
$   710
$1,430
$3,800
$4,750
Individual taxpayers must itemize deductions on Schedule A in order to deduct any LTC insurance premiums.  Only the lesser of the age-based, Eligible premium or the actual premium is included as a deductible medical expense.  And then all medical expenses must exceed 10% (7.5% if age 65+) of Adjusted Gross Income to get any actual deduction.

Individual taxpayers with a Health Savings Account can withdraw money from their HSA tax-free to pay LTC insurance premiums, but only up to the age-based, Eligible premium limits.

Self-employed business owners get an "above-the-line" deduction, they do NOT have to itemize. LTC insurance premiums up to the Eligible limits - for the owner and a spouse - are included as part of the "Self Employed Health Insurance Deduction".  (Form 1040, page 1, line 29 (2013))
Tax-Free Benefit Payments
The per-diem (or "indemnity") tax-free benefit payment limitation for 2015 remains at the greater of $330 per day, or actual expenses paid (no change from 2014).  Benefits paid as a "reimbursement" of actual expenses are received tax-free.

Source:  IRS Revenue Procedure 2013-35 (2014 limits) and 2014-61 (2015 limits)
This information is a summary only and should not be considered as tax advice.
Not to be used in a specific tax situation.
Please consult with a qualified tax advisor before implementing any tax strategy.
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Transamerica Parent Company Takes Longevity Loss

11/17/2014

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Another company takes an earnings loss on adjusted longevity assumptions.  Transamerica is a leading underwriter of traditional LTC insurance.  While the article doesn't specifically mention LTC insurance, longevity assumptions are an important aspect of LTC insurance pricing and the ability to pay future claims.
"Each year in the third quarter the company reviews its assumptions o how long people live, which form the basis for estimates on future payout obligations on life insurance policies and retirement products."
Click here to read the full article from LifeHealthPro.
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"Genworth Stock Can Rise 42%"

11/14/2014

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Analysts' opinions are just that, opinions.  Yet more and more are suggesting that the market grossly over-reacted to Genworth's charge against earnings to bolster LTC policyholder reserves.

I strongly believe that LTC policyholders - and those who still need to buy LTC insurance - should see Genworth's actions as GOOD NEWS, and that policyholder security should be evaluated differently than an investor's returns.  But it's also helpful to recognize - both insurance buyers and stock investors - that news and short-term market swings need to be taken in context with long-term goals.

Read the Barrons report about Raymond James' upgrade by clicking the following link:
http://online.barrons.com/articles/genworth-stock-can-rise-42-1415909893
This information is not intended to be investment advice, nor a solicitation to buy or sell any particular stock or investment, but is presented as information about LTC insurance.
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Bill Comfort Quoted in WSJ

11/6/2014

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Click the story title to link to an excellent article putting Genworth's stock decline and policyholder security in a broader context:
"Long-Term-Care Insurance: What Policyholders Should Know"
The Wall Street Journal
TotalReturn Personal Finance Blog
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Genworth's Stock Decline Is Good for Policyholders

11/6/2014

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Bad news for INVESTORS.  Good news for POLICYHOLDERS.
OR: Shareholders lost value.  Policyholders gained security.

Stock price (shareholder value and return) and claims paying ability (policyholder security) are two separate issues.

The reason for the downdraft in Genworth's stock price is actually a good thing for policyholders.  The company put more than a half-BILLION dollars into its policyholder reserves.  What I take from this is that instead of simply pursuing yet another round of rate increases (which take a long time), the company has taken a charge to earnings which hurts shareholders in the short run in order to keep promises to policyholders for the long run.  

There may, or may not, be additional premium increases on older policies, but this should not be read as bad news for LTC policyholders, quite the opposite in my opinion.

From the web:
  • After completing the Long Term Care Insurance comprehensive claim review, Genworth (GNW -30.3%) boosts reserves by $531M and takes an after-tax earnings charge of $345M.
  • Q3's net operating loss of $317M or $0.64 per share stands against net operating income of $139M or $0.28 per share one year ago.
  • CEO: Tom McInerney: "The turnaround in this business will be more difficult and prolonged because of the poor performance of the older generation products."​​
http://seekingalpha.com/news/2102685-genworth-plummets-after-ltc-charge
This information is not intended to be investment advice, nor a solicitation to buy or sell any particular stock or investment, but is presented as information about LTC insurance.
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Comfort Long Term Care is an independent insurance brokerage agency specializing exclusively in LTC insurance. Agency owner, Bill Comfort, The LTCpro® is a LTC specialist celebrating 30+ years of experience since 1991! We are based in the Raleigh, Durham, Chapel Hill, North Carolina Triangle region, but we serve clients throughout NC and across the country. We also have an office in St. Louis, Missouri.
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  • TakeCare!
    • LTC Awareness
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