It’s that time of year where those of us who have less than favorable results from our income tax filing get our backsides in gear and get ready to file.
The Health Insurance Portability and Acountability Act (HIPAA) set forth requirements for “tax qualified long term care policies that are codified in section 7702(b). Asset-based products are included in this.
HIPAA amended Internal Revenue Code section 213(d) to include LTC premiums in the definition of “medical care”. When this is applied in the realm of asset-based LTC, only the Continuation of Benefit Rider is considered LTC.
In order to receive this deduction, the taxpayer must itemize their deductions when they file their tax return.
A second consideration is that their “medical care” deduction must exceed 10% of their adjusted gross income.
A third piece is that the taxpayer may only claim up to the age-related limit. Annually, this limit is indexed for inflation and released near the end of the year for the upcoming filing season. The chart below shows 2019 limits.