LTC Tax Break Clears House

Premiums for long-term care insurance, presumably including those paid into the new Federal Long Term Care Insurance Program, would be eligible for more favorable tax treatment under legislation (HR-4946) passed by the House. The measure would allow “above the line” deductions of LTC policy premiums for which the individual pays at least 50 percent of the total premium–in the FLTCIP, enrollees must pay the entire premium. However, the tax break would be phased out for individuals with modified adjusted gross incomes between $20,000 and $40,000 ($40,000 to $80,000 for those married filing jointly) and eliminated above those levels. Meanwhile, a new personal exemption, starting at $500 and phasing up to $3,000 over 10 years, would be allowed for a dependent family member with long-term care needs.