Benefits will not be taxable income, as long as benefit payments above $220 per day do not exceed the actual cost of care. Benefit payments in excess of $220 per day that do exceed the actual cost of care will be taxed as income.
A portion of long-term care insurance premium based on age of policy holder now counts as medical expense. Since medical expenses in excess of 7 1/2 % are tax deductible, this means that a portion of your long term care insurance premiums will help you reach that threshold and may even put you over it to receive a tax deduction. Here are the amounts that count and they will be allowed to increase each year based on the medical consumer price index:
2008 Tax Year
| Age At End of Taxable Year |
Amount of LTC Prem. That Counts As A Medical Expense |
| 40 & Younger |
$310 |
| 41-50 |
$580 |
| 51-60 |
$1,150 |
| 61-70 |
$3,080 |
| 70 and Older |
$3,850 |
The allowable percentage of long term care insurance premium is now treated like health insurance for the self-employed tax deduction, which was 45% for the 1998 tax year and will increase to 100% by the year 2007. "SELF-EMPLOYED" means sole proprietors, partnerships and greater than 2% shareholders of S-Corporations and Limited Liability Corporations.
Employers will receive a tax deduction for any portion of the long-term care insurance premiums paid for employees.
Premium contributions made by employers will not be taxable income to employees.
Long-term care insurance premium is an acceptable medical expense under the new medical savings account experiment for the first 750,000 workers who set them up who are either self-employed or who work for small businesses with 50 employees or less. Long-term care insurance can also be paid from medical savings accounts for the tax year 1999 established by the first 390,000 Medicare beneficiaries.
Unreimbursed expenses for qualified long-term care services. The cost of long-term care itself, not LTC insurance premium, will count toward the itemized medical deduction, if paid on behalf of yourself, your spouse or your dependents. (This means unreimbursed qualified care as well as long-term care insurance premium that you pay for a parent will count as long as you contribute more than 50% of your parent's support. And, the allowable portion of long-term care insurance premium that counts is based on the parents age, not yours.)
Anyone who charges a fee to help a person intentionally transfer assets (including transfers to trusts) to qualify for Medicaid is guilty of a criminal offense, if the transfer creates a period of ineligibility for Medicaid.
What is this law really saying? THE MESSAGE IS LOUD AND CLEAR: Take care of your long-term care needs with private insurance because there isn't enough money to create a new entitlement program for everyone.
Scenario: If someone just walked into the room and made the announcement that a bomb had been hidden on 1 out of 2 people in the room, and that the bombs could explode today, next week, or 30 years from now, HOW WOULD YOU REACT?
This is the actual risk for needing long-term care services at some point in our lives. The percentage is greater than 50 percent.
You are in charge of your future. I have a great affordable solution. Lets get together. Call me soon at (208) 345-4171. The information is FREE with no obligation. You truly are in charge. I work Saturdays and at your convenience.