Tax Treatment

Qualified long-term care insurance policies and qualified long-term care services are treated the same as health insurance for federal tax purposes. Both premiums for long-term care insurance and out-of-pocket expenses can be deducted from federal income taxes if the costs exceed the tax code’s applicable base for medical expense deductions. In addition, insurance benefits from qualified long-term care policies are not taxable as long as the benefits received do not exceed certain limits.

Most long-term care policies purchased today are considered qualified for federal tax purposes.