For the first time the Internal Revenue Service has not raised tax-deductible limits for long-term care insurance according to the American Association for Long-Term Care Insurance (AALTCI).
“Tax deductibility is one of the best-kept secrets and benefits potentially for millions of seniors,” said AALTCI Director Jesse Slome. “Deductibility becomes especially valuable after retirement when income decreases and health costs generally go up.”
The Internal Revenue Service just announced the 2022 limits for tax deductibility of long-term care insurance premiums. “For the first time since we’ve reported this information, the IRS has failed to increase the level,” Slome reports. “That said, the maximum deductibility remains high and the benefit for older individuals and couples is significant.”
According to IRS Revenue Procedure 2021-45, a couple age 70 or older who both have the right kind of long-term care insurance policy can deduct as much as $11,280 in 2022. This is the same as the maximum for 2021 and an increase from the $10,860 limit for 2020. The 2019 limit was $10,540.
“The special tax advantages permitted by the IRS are only available for tax-qualified long-term care insurance policies,” Slome explains. Some 50,000 traditional long-term care insurance policies are being sold annually according to AALTCI. “The majority of sales today are linked-benefit policies, some of which may offer a limited long-term care insurance tax deduction.”
Slome notes that the tax deductibility benefit often does not come into play when the individual or the couple first purchase insurance protection. “Before retirement most people are not deducting medical-related expenses,” Slome acknowledges. “But after retirement it’s far more likely that you can benefit from the deductibility.”
2022 Tax Deductible Limits
Age 40 or less: $450
More than 40 but not more than 50: $850
More than 50 but not more than 60: $1,690
More than 60 but not more than 70: $4,520
More than 70: $5,640
The American Association for Long-Term Care Insurance advocates for the importance of planning and supports insurance and financial professionals who provide long-term care financing solutions.