About Long Term Care Insurance Tax and Non-Tax Qualified
Long-term care insurance pays benefits that can be used for nursing home care, home health care, skilled nursing care and adult day care. Policies vary in specifics, and one option available is a tax-qualified plan.-
Tax Qualified Long-term Care
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With tax-qualified policies, individuals are allowed to deduct a portion of their long-term care premiums on their income taxes each year. Certain conditions must be met for a policy to be tax-qualified. These include a doctor certifying that the condition triggering the use of the policy will last at least 90 days.
Non-tax Qualified Policies
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Non-tax qualified plans are not subject to the requirements of tax-qualified plans. They can be more expensive than tax-qualified plans, but they provide additional flexibility.
Other Policy Considerations
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It is important to choose the daily and monthly benefit amounts carefully, along with the benefit multiplier, which indicates how long the policy will last. The elimination period, or waiting period, affects the policy premium and future out-of-pocket costs. Policies vary in the specific types of care they cover. All of these issues are critical to long-term care insurance decisions.
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