2011 IRS guidelines for deducting long-term care premiums

The financial burden families face when a loved one needs long-term care can be staggering, and will quickly wipe out the average middle class family. That's why, if you can afford it and your health allows you to qualify, I always recommend securing long-term care insurance.  

For 2011, the IRS has increased the amount you can deduct from your  federal taxes for long-term care premiums. The IRS deductibility limits are based on the age of the taxpayer at the end of the year. To qualify for the deduction, you must meet two requirements:

1. Your long-term care insurance policy must be "qualified." If issued after Jan. 1, 1997, the policy must be in compliance with the regulations established by the National Association of Insurance Commissioners, and offer inflation and nonforfeiture protection (whether or not the insured party chooses those options). Any policy purchased before Jan. 1, 1997 will be grandfathered in and treated as qualified so long as it has been approved by the insurance commissioner of the state in which it was sold.
2. Second, the premiums, along with your other unreimbursed medical expenses, must exceed 7.5 percent of your adjusted gross income.

Here are the 2011 deductibility limits:

• If you've attained the age of 40 before end of taxable year:  $340 maximum deduction
• If you've attained the age of  40 but not more than 50 before end of taxable year  - $640 maximum deduction
• If you've attained the age of 50 but not more than 60 before end of taxable year - $1270 maximum deduction
• If you've attained the age of 60 but not more than 70 before end of taxable year - $3390 maximum deduction
• If you've attained an age over 70 before end of taxable year - $4240 maximum deduction

To learn more about long-term care insurance from the US Dept of Health and Human Services, click here.
To learn more about long-term care insurance specific to Florida, click here.