Federally Tax-Qualified Policies Federally Non-Tax-Qualified Policies 1. You can include premiums with other uncompensated medical expenses as income tax deductions if the total is greater than of your adjusted gross income (). There’s a cap on how much you can claim for long-term care insurance premiums. 1. You may or may not be able to deduct any part of your annual premiums. Congress and the U.S. Department of the Treasury haven’t clarified this area of the law. 2. Benefits you receive and use to pay for long-term care services generally aren’t counted as income. Benefits you receive from policies that use the expense-incurred method may be taxable if the benefits are greater than the costs of long-term care services. All benefit payments up to the federally approved per diem (daily) rate are tax-free from policies that use the indemnity or disability methods, even if the benefits are greater than your expenses. 2. The benefits you receive may or may not count as income. Congress and the U.S. Department of the Treasury haven’t clarified this area of the law. 3. To trigger the benefits under your policy, the federal law requires you to be unable to do two ADLs without substantial assistance. 3. Policies can offer a different combination of benefit triggers. Benefit triggers aren’t restricted to two ADLs. 4. Policies can’t use “medical necessity” as a benefit trigger. 4. The benefit triggers can be “medical necessity” and/or other measures of disability. 5. Policies can require that a person be chronically ill or have disability lasting at 90 days. 5. Policies don’t have to require the disability to last at least 90 days. 6. Policies that cognitive impairment must require “substantial supervision” as a benefit trigger. 6. Policies don’t have to require “substantial to trigger benefits for cognitive impairments. Whether you buy a tax-qualified or a non-tax-qualified policy, consult with your tax consultant or legal advisor about the tax consequences for you.
Washington Office of the Insurance Commissioner 302 Sid Snyder Avenue SW Insurance Suite 200 Olympia, WA. 98504-0255 (360) 725-7100 1-800-562-6900 Fax: (360) 586-3535 Washington Statewide Health Insurance Benefits Advisors (SHIBA) 1-800-562-6900 (360) 725-7171 Fax: (360) 586-4103 TDD: (360) 586-0241 Washington Aging & Dept. of Social & Health Services Blake Office Park West 4450 10th Avenue SE Lacey, WA 98503 (360) 725-2300 West Virginia Dept. of Insurance P.O. Box 50540 Charleston, WV 25305-0540 1-888-879-9842 Fax: www.wvinsurance.gov West Virginia State Health Insurance Assistance Program 1-877-987-4463 (304) 558-3317 Fax: (304) 558-0004 West Virginia Bureau of Senior Services 1900 Kanawha Blvd, East Charleston, WV (304) 558-3317 877-987-3646 Fax: (304) 558-5609 Office of the Commissioner of Ins. of Wisconsin P.O. Box 7873 125 South Webster Street Madison, WI (608) 266-3585 Fax: (608) 266-9935 Wisconsin SHIP (608) 266-1865 800-242-1060 Fax: (608) 267-3203 TTY: 888-701-1251 Wisconsin 1402 Pankratz St., Ste. 111 Madison, WI 53704-4001 800-815-0015 Fax: 608-246-7001 Wyoming Department of Insurance 106 East 6th Avenue Cheyenne, WY 82002-0440 (307) 777-7401 Fax: (307) 777-2446 Wyoming State Health Insurance Information Program 1-800-856-4398 Fax: (307) 777-2446 Wyoming Aging Division Department of Health 6101 Yellowstone Road Cheyenne, WY 82002 (307) 777-7986 or 1-800-442-2766 Fax: (307) 777-5340 Endnotes