October 25, 2016 -  Los Angeles, CA — The tax deductible limits for traditional long-term care insurance premiums paid in 2017 increased according to a just-released IRS announcement.

"The tax deductibility of premiums when you purchase traditional long-term care insurance provides a real incentive for consumers, especially after retirement," explains Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI).   "The special tax advantages are not available when individuals purchase linked-benefit products such as life insurance or annuity policies that can provide a future long-term care benefit."

According to AALTCI, in 2016 more people will purchase combo products than are purchasing traditional LTC insurance policies.  "Only traditional long-term care insurance policies have the benefit of potentially being tax-deductible to an individual," Slome acknowledges.  "After retirement when income typically declines, tax deductions can take on a significant added value to take advantage of."

Starting in 2017, all individuals may deduct qualified medical expenses that exceed 10 percent of adjusted gross income (AGI) for the year.   For 2016, individuals age 65 and older the threshold remains at 7.5 percent of AGI.

Premiums paid for traditional long-term care insurance are includable in the term 'medical care'.   The following are the just announced 2017 limits:

 

Attained Age Before Close of Taxable Year         2017 Limit 

40 or less                                                               $410   (+ 5.1%)

More than 40 but not more than 50                      $770                

More than 50 but not more than 60                      $1,530              

More than 60 but not more than 70                      $4,090            

More than 70                                                       $5,110 (+4.9)     

Source:  IRS Revenue Procedure 2016-55 (2017 limits).