Long-Term Care Premium Deductibility Limits Increase in 2014

While the importance of healthcare is a topic that is often discussed, many people fail to take long-term care insurance into consideration.  Yet, long-term care insurance can be just as essential to your financial plan as any other preparation done for retirement.  While no one wants to consider that they or their loved ones may need long-term care, it is a reality that is faced by many who have entered retirement with all of their bases covered – except for one. There are many reasons why discussions of long-term care coverage are often avoided.  Long-termcare insurance can be pricey and is often thought an unnecessary financial expense, yet it may save you money and provide priceless piece of mind.

November is Long-Term Care Awareness Month, an effort to bring awareness to the importance of the issue. According to Jesse Slome, the executive director of the American Association for Long Term Care insurance, the annual event “provides an opportunity for all those involved in the various industries to focus on creating heightened awareness.”

Coinciding with Long-Term Care Awareness Month, the American Association for Long-Term Care Insurance announced on November 1st that the deductibility levels for long-term care policies purchased in 2014 have increased.

The Internal Revenue Service is upping the deductibility limits in the New Year, increasing the amount that taxpayers can deduct when they buy long-term care insurance.

The premiums for “qualified” long-term care insurance  – what is paid to the insurance company to maintain the policy – are tax deductible for those covered by the policy if the amount surpasses 10 percent of the adjusted gross income of the policyholder (7.5% for those over 65 years old).  This includes medical expenses that are not reimbursed, as well as Medicare premiums.

The limit for how large a premium can be deducted depends on the age of the taxpayer, but the deductibility limits for 2014 have increased for the coming year, making it the perfect time to discuss adding long-term care insurance to your existing financial plan.

It is important to speak with your estate planning attorney and your insurance agent, about the benefits of long-term care insurance as part of your estate plan.