| Nov. 8, 2005- The Internal Revenue Service has | | | | More than 50 but not more than 60 $1,060 |
| announced the 2006 limitations on the deductibility | | | | More than 60 but not more than 70 $2,830 |
| of long-term care insurance premiums from | | | | More than 70 $3,530 |
| taxes. | | | | What Is a "Qualified" Policy? |
| Premiums for "qualified" (see explanation below) | | | | To be "qualified," policies issued on or after |
| long-term care policies are treated as an | | | | January 1, 1997, must adhere to regulations |
| unreimbursed medical expense. These premiums | | | | established by the National Association of |
| what the policyholder pays the insurance | | | | Insurance Commissioners. Among the |
| company to keep the policy in force -- are | | | | requirements are that the policy must offer the |
| deductible to the extent that they, along with | | | | consumer the options of "inflation" and |
| other unreimbursed medical expenses (including | | | | "nonforfeiture" protection, although the consumer |
| "Medigap" insurance premiums), exceed 7.5 | | | | can choose not to purchase these features. |
| percent of the insured's adjusted gross income. | | | | Policies purchased before January 1, 1997, will be |
| Long-term care insurance premiums are deductible | | | | grandfathered and treated as "qualified" as long as |
| for the taxpayer, his or her spouse and other | | | | they have been approved by the insurance |
| dependents. | | | | commissioner of the state in which they are sold. |
| However, there is a limit on how large a premium | | | | The Taxation of Benefits |
| can be deducted, depending on the age of the | | | | Benefits from reimbursement policies, which pay |
| taxpayer at the end of the year. Following are | | | | for the actual services a beneficiary receives, are |
| the deductibility limits for 2006. Any premium | | | | not included in income. Benefits from per diem or |
| amounts above these limits are not considered to | | | | indemnity policies, which pay a predetermined |
| be a medical expense. | | | | amount each day, are not included in income |
| Attained age before the close Maximum | | | | except amounts that exceed the beneficiary's |
| deductionof the taxable year | | | | total qualified long-term care expenses or $250 |
| 40 or less $280 | | | | per day (for 2006), whichever is greater. |
| More than 40 but not more than 50 $530 | | | | |