IRS Increases 2015 Tax Deductions for LTC Insurance

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.