What is a Tax-Qualified Long-Term Care Insurance Policy?

What is a Tax-Qualified Long-Term Care Policy?
In a tax-qualified LTC policy, premiums paid by an individual can be counted as
un-reimbursed medical expenses and may be deducted if total un-reimbursed
medical expenses exceed 7.5 percent of adjusted gross income.  There are
limitations based on age.
Benefits paid under a tax-qualified LTC policy are generally excluded from
taxable income.
3A tax-qualified long-term care policy must meet at least the following criteria:
• must be guaranteed renewable and cannot have a cash surrender
value;
• there must be an offer of a nonforfeiture benefit;
• individuals must be unable to do two activities of daily living
(ADLs) without substantial assistance;
• individuals with a cognitive impairment must require substantial
supervision to protect self from threats to health and safety; and
• disability must be expected to last for at least 90 days, and
certification of such must be from a licensed health care
practitioner.
Important: If you have questions about the tax status of the long-term care
policy that you are considering purchasing, you can contact your agent or the
insurance carrier.  If you have questions on how the purchase of a long-term
care tax-qualified policy will impact the taxes you pay, consult with your tax
advisor.