The Health Insurance Portability and Accessibility Act of 1996 is most commonly referred to as HIPPA. While HIPAA covers a lot of different aspects of patient rights, it also affects how premiums and benefits are taxed. Nothing is ever simple when it comes to taxes, so if you have concerns about how long-term care insurance will affect your loved ones estate planning, please contact a qualified Cleveland elder law attorney.
Are benefits from long-term care insurance taxable?
HIPAA tax clarifications for private long-term care insurance translate to mean that benefits from qualified long-term care insurance plans, like major medical coverage, are not typically taxable.
Are long-term care insurance costs tax deductible?
Yes. You should be able to take a tax deduction for the premiums paid on tax-qualified long-term care insurance policies. You can also deduct the costs associated with receiving long-term care that are not covered by the insurance policy. Thanks to HIPAA, premiums and out of pocket expenses for long-term care can be applied toward meeting the federal tax code’s 7.5% floor for medical expense deductions. Before you take this deduction, it is best to talk to your accountant or financial planner, as there are limits based on age that determine the amounts of premiums that can be applied.
Are there tax benefits for employers that offer long-term care insurance?
Yes. Employers are able to deduct both the initial cost of setting up a long-term insurance plan for their employees and the contributions they make toward employee premiums. Both are deducted as business expenses.
