Individual taxpayer who does not itemize
IRC Sec 63(b)
Individual taxpayer who itemizes deductions
Treated as medical insurance premiums.6 Limited to the lesser of the actual premium paid or the amount per person from an age-related table that caps maximum deductible premiums.
IRC Sec 7702B(a)(1)
Premium deduction is effective to the extent that the deductible premium above added to taxpayer paid medical premiums and deductible out-of pocket medical expenses exceeds 10 percent of the taxpayers AGI.
IRC Sec 213(f)
IRAs may not own LTCI, and IRA distributions may not be rolled tax-free to LTCI. Distributions, after tax, may pay LTCI premiums.
Flexible Spending Accounts (FSAs)
FSAs may not reimburse LTCI premium.
IRC Sec 106(c)
LTCI may not be paid through an employer provided cafeteria plan.
IRC Sec 125(f)(2)
Health Savings Accounts (HSAs)
LTCI premiums can be reimbursed through an HSA, tax-free, up to the age-related cap. HSA may be inside an employer provided cafeteria plan.
IRC Sec 106(d)
For more tax information including company/employer paid premiums, please download and review our LTC Tax Funding Guide. To discuss a specific scenario, our Advanced Sales Department is available via email at firstname.lastname@example.org.