Are Nursing Care Policies Tax Deductible?

Long term nursing care can be very expensive. Long term care insurance (LTCi) is an insurance product that covers some of the costs of extended nursing care. This care could come from different sources. It may cover an assisted living home, skilled nursing facility, or even home health care.

The US Department of Health and Human Services have published estimates on their website. They believe that 70% of us may need nursing care in our lives. This care can be very expensive, and the cost is not something that has been planned for very well by many Americans. A stay in a nursing home can cost $5,000 a month or more. This cost is only increasing over time. These costs can quickly eat up a lifetime of savings.

Some people figure that this will get taken care of by some government program. However, Medicare only pays for short term nursing care. A Medicare supplement will usually only cover medical services that are already covered, to some degree, by Medicare. You cannot count on Medicare to pay for long term nursing care.

Medicaid is the US health insurance program for poor people with few assets. Medicaid will pay for nursing. However, people have to deplete most of their assets in order to qualify for this program. If you want to keep your assets, you will not be happy if you have to go on Medicaid.

LTCi (long term care insurance) is a type of insurance policy that covers some of the costs of nursing care. The cost of long term care insurance will vary by the type of plan, the age and health of the applicant, and also by the place the applicant lives in. Premiums for younger and healthier people will be lower than they would be for older people. Like any other health insurance policy, an insurer may even decline people with certain health conditions.

Some tax qualified long term care insurance policy premiums can be deducted from income up to certain limits. The limits are set by the IRS. Premiums will probably increase with age. This makes sense since premiums will be more expensive for older people, and also the need for this coverage can be more urgent with time. So the government is using this deduction as a way to encourage people to consider buying some form of LTCi!

Should you buy a policy? We all have our own unique needs and situations. You need to evaluate your own retirement plans, needs, and budgets. In addition, policies are not standardized so you will have to spend some time figuring out which type of LTCi would benefit you the most. Some policies only cover skilled nursing facilities. Other policies will cover nursing care in assisted living facilities, adult day care, or at home. You can also buy policies with different waiting periods, deductibles, and daily limits. It would help to consult with a qualified agent or compare policies online.

Some of these policies are not tax deductible. Non-tax qualified plans may not meet the government requirements, and so they are not deductible. However, they may have more relaxed standards so it is easier for the insured person to make a claim.


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Learn more about tax qualified insurance to cover the costs of nursing care. We also have free online quote forms so you can compare long term care insurance quotes!