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Nursing homes and other long-term care arrangements are
so expensive that many people are taking a closer look
at buying long-term care insurance to protect themselves
and their families — just in case.
The typical long-term care
insurance policy will pay for custodial care after a
waiting period has expired, reimbursing expenses up to a
maximum limit specified in the policy. Eligibility for
reimbursement usually hinges on the covered individual’s
inability to perform several activities of daily living,
such as bathing and dressing.
If you are thinking about
buying long-term care insurance, you’ll be interested to
know that, within limits, premiums paid for qualified
policies are deductible as an itemized medical expense.
Premiums are eligible for a deduction only up to a
specific dollar amount (adjusted for inflation) that
varies depending upon the age of the covered individual.
The IRS limits for 2008 are:
Age - Premium Limit
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40 or under - $310
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41-50 - $580
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51-60 - $1,150
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61-70 - $3,080
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Over 70 - $3,850
These limits apply on a
per-person basis. For example, a married couple over age
70 filing a joint tax return could potentially deduct up
to $7,700 ($3,850 × 2). Keep in mind, however, that
itemized medical expenses are deductible only to the
extent that they, in total, exceed 7.5% of adjusted
gross income (AGI).
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