The Internal Revenue Service has implemented changes in the deductibility of long-term care insurance premiums and benefits that will apply in 2003. Here are the limits, based on age:
40 and younger - $250
41-50 - $470
51-60 - $940
61-70 - $2510
71 and older - $3130
For business owners such as sole proprietors, partners, 2 percent and greater shareholders of S-corporations, and members of LLC's will no longer be limited to the 70% deduction of the eligible Long Term Care premiums. As of 2003, they will be able to deduct 100% of the eligible Long Term Care premium.
Benefits paid on a qualified long-term care insurance policy to an individual will not be taxable income as long as benefit payments above $220 per day do not exceed the actual cost of care.