Is Long Term Care Insurance Tax Deductible?

When you have long-term care insurance, you may have questions beyond how much it costs and what type of care it covers.

And questions like – Is long-term care insurance tax deductible? come up more often than you might think.

So, what is the limit for tax deductions on long-term care insurance? How can you find out if you can deduct long-term care insurance from my taxes? In this post we will cover how taxes and long term care insurance work in tandem.

What Is A Tax Deduction?

A tax deduction reduces taxable income by subtracting eligible expenses from gross income. Common deductions include mortgage interest, charitable donations, and business expenses. By lowering taxable income, tax deductions reduce the amount of income subject to tax.

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Is Long-Term Care Insurance Tax Deductible?After retirement, many people find that their medical expenses increase across the board. That’s why the IRS has implemented policies that allow you to deduct the costs over a certain threshold from your taxes.

These deductions don’t apply to all long-term care insurance policies, though. Your eligibility for tax deductions based on your policy depends on many factors, the most significant of which is the cost of your plan.

If you don’t pay enough to reach the minimum limit for tax deduction standards, you can’t deduct your policy costs. Additionally, your age affects how much you can deduct, even if you are eligible, which we’ll talk about more later.

Your deductions also vary based on your situation. For example, the long-term care insurance deduction for self-employed individuals differs from the long-term care premiums tax deductible for S corps.

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Self-Employed Tax DeductionsWhen you’re self-employed, your taxes work differently than if you were an individual working for a company.

According to the American Association for Long-Term Care Insurance (AALTCI), a self-employed person can deduct 100 percent of their long-term care insurance expenses in 2020.

However, the tax-deductible limit still applies.

If the amount you pay exceeds the limit, you can’t deduct more than that stated limit.

Additionally, if your spouse has a long-term care insurance policy and is eligible for a subsidized insurance plan—or one where their employer pays their premiums—you can’t deduct their premiums.

There are other components, but these encompass some of the most significant factors. 

According to the American Association for Long-Term Care Insurance, the average long-term care insurance policy costs $2,466 per year for a couple at age 55.

The cost goes up as you get older. For example, if that same couple purchases a policy at age 60, their prices rise almost $1,000 to an annual average of $3,381.

That’s because as you age and your health worsens, insurance companies are less likely to approve you for a policy.

Tax Deductions For Subchapter S CorporationsSubchapter S corporations, along with partnerships and LLCs, work a little differently than self-employment when it comes to tax deductions on long-term care insurance.

In these situations, if you own more than 2 percent of the S Corp as a shareholder, the S Corp pays your insurance premium. The same concept goes for LLCs and partnerships.

As with self-employed individuals, S Corp members can deduct up to 100 percent of their long-term insurance premiums.

This will depend on their Adjusted Gross Income (AGI) and the eligible premium limits set forth by the IRS in the given year.

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2025 Tax Deductible Limits for Long-Term Care InsuranceIn 2025, tax-deductible limits for qualified long-term care insurance premiums depend on age. For example, individuals aged 60–70 can deduct up to $4,770, while those over 70 can deduct up to $5,960. These limits apply to federal tax deductions under IRC Section 213(d).

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Taking ActionWhen you purchase long-term care insurance, you want to know how your premiums affect your tax deductions.  That means understanding whether you have a tax-qualified or non-tax qualified policy. It also requires you to know the yearly tax-deductible limit.

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