Although millions of Americans file for tax deductions each year, many of them could be unaware that premiums for long-term health insurance could be deducted from their state and federal income taxes.
Some 20 million Americans are expected to file individual tax returns this year with some 7.2 million of them itemizing deductions.
To spread awareness of this issue, The American Association for Long-Term Care Insurance has published a guide detailing what options are available.
The trade group’s 2013 Guide To Tax Qualified Long Term Care Insurance explains the tax advantages available for individuals and business owners.
The tax deductibility of long term care insurance a “best kept secret,” according to Jesse Slome, AALTCI’s executive director.
“The Federal government and a number of states recognize the importance of giving people an incentive to plan for the very real risk of needing long term care at some point in their life,” Slome said in a statement. “Tax deductions or even tax credits are available that are enormously beneficial, especially to business owners today.”
For 2012, the maximum an individual could deduct is $4,370 or $8,740 for a couple where both spouses are insured. Slome said that for 2013 the potential for tax deductions and credits could be as much as $4,500 per individual or $9,100 for couples.
“The Internal Revenue Service announces the increase each year so we annually update our guide to help or members educate people,” Slome said. “For individuals, the ability to deduct the costs of long term health care insurance is especially valuable after retirement when income drops, expenses increase and the likelihood of meeting medical expense limits increases.”
Business owners today can benefit from significant added tax advantages.
“Small business especially, those with between 10 and 50 employees today are a prime beneficiary because they can enjoy both tax benefits and the potential for small employer discounts offered by a number of leading long term care insurers,” Slome said.
The 2013 guide is available in electronic format.
