Premiums Qualified long-term care insurance policies and qualified long-term care services are treated the same as health insurance for federal tax purposes. You can deduct premiums for qualified long-term care insurance and out-of-pocket expenses if the costs exceed the 7.5 percent base for medical expenses deductions in the tax code. The amount of annual premiums that can be deducted depends on age. Most long-term care policies purchased before 1997 are considered qualified for federal tax purposes. Many states provide tax credits or deductions from state taxes for long-term care insurance premiums. Your insurance agent, financial planner, or accountant should be able to tell you if your state provides such credits or deductions. While the last several Congresses have considered proposals to create a federal above-the-line tax deduction for long-term care insurance premiums, legislation has not yet passed. Benefits Benefits from qualified long-term care insurance policies are not taxed except for per diem policies that pay amounts that exceed limits set by the IRS.