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TAX ISSUES
The Federal Government passed the Health Insurance
Portability and Accountability Act of 1996 (HIPAA). This act designated
two types of long-term care insurance policies. Tax Qualified policies
may be eligible for tax deductions and must adhere to standards
set forth by HIPAA. Non Tax Qualified policies are not eligible
for tax deductions and do not have to adhere to the standards set
forth by HIPAA.
Which is the best policy for you? Please
or
to discuss this and we can go over this in more detail for
you and provide a recommendation for you.
Tax Incentives
Individuals
According to the table below, a portion of your long-term care insurance
premiums may be included as a medical expense. If your total medical
expenses exceed 7 1/2% of your adjusted gross income, the excess
can be included as an itemized deduction.
Qualified
Long-Term Care Insurance (LTCi)
The maximum deduction that an
individual who itemizes deductions may take for
qualified long-term care insurance premiums is set under
Internal Revenue Code section 213(d)and adjusted
annually for increases in the medical care cost
component of the consumer price index. The Treasury
Department and the Internal Revenue Service have
released federal tax rate and cost-of-living adjustment
(COLA) tables for 2007. The new maximum qualified
long-term care premium deduction for 2006 and 2007 is as
follows:
|
Attained Age Before Close
of Year
|
2006 |
2007 |
|
40 or less |
$ 280 |
$290 |
|
More than 40 but no more than
50 |
$530 |
$550 |
|
More than 50 but no more than
60 |
$1,060 |
$1,110 |
|
More than 60 but no more than
70 |
$2,830 |
$2,950 |
|
More than 70 |
$3,530 |
$3,680 |
In addition, for
policies that are not expense reimbursement, but per
diem, the maximum per diem benefit that is not taxable
increases from $240 in 2005 to $250 in 2006
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The information
contained in this summary is provided with the understanding that it
is not to be interpreted as specific legal or tax advice. Neither
ArkLaTex.biz, nor any of its employees or representatives is
authorized to give legal or tax advice. Individuals are encouraged
to seek the guidance of their own personal legal or tax counsel.
Self-Employed
LTC Insurance premium up to the above limits is now treated like
health insurance for the self-employed tax deduction, which was 70%
for 2002 and
100% for tax years 2003 on.
Self-employed means sole proprietorships, partnerships, "greater
than 2% shareholders" of S-corporations or Limited Liability
Corporations. Consult your tax advisor.
There are additional tax incentives for C-Corporations. If you
would like information on this please
or
and we can provide this information to you.
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