Long Term Care Tax Information

Bedrosian & Associates recommends purchasing individual long term care on an after-tax basis so the long term care benefit is tax-free. The tax deduction on your tax return for a qualified long-term care insurance policy’s premium is limited, especially for those with a high income level.

Can I deduct long term care costs on my tax return?

You can deduct on your tax return the costs of long term care for yourself, your spouse, or your dependent if the services are required because of a chronic illness. Generally, unreimbursed expenses that exceed 7½% of Adjusted Gross Income are tax deductible on your tax return. Your total long term care costs for the tax year that you deduct on your tax return must be reduced by any reimbursement. The chronically ill person must have been certified within the last 12 months by a licensed health care practitioner that they are unable to perform, for a period of at least 90 days, two or more of the following activities without substantial assistance:

  • eating
  • toileting
  • dressing
  • bathing
  • continence or
  • transferring

Services provided by a relative are only tax deductible on your tax return if that relative is a licensed professional. To the extent that the insurance company reimburses long term care expenses, benefits paid by an indemnity type contract are tax free. In addition long term care insurance premiums and long term care services may be paid on a tax-deductible basis through a Health Savings Account (HSA). Current law limits the annual amount of LTC premiums that can be deducted, based upon the age of the insured. The annual limitation amounts are adjusted for inflation each year.

 

Age Before Close of Tax Year

  • 40 or less
  • 41 to 50
  • 51 to 60
  • 61 to 70
  • over 70
2012 Limitation

  • $350
  • $660
  • $1,310
  • $3,500
  • $4,370
2013 Limitation

  • $360
  • $680
  • $1,360
  • $3,640
  • $4,550
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Bedrosian & Associates

Address: 525 Veterans Blvd., Suite 102 Redwood City, CA 94063

Phone: (650) 367-0259 Fax: (650) 367-0599

Ron Bedrosian License #0478051

Ryan Bedrosian License #0F00667

Alex Bedrosian License #0G33562