One of the incentives to buying a long-term care insurance policy is that the premiums are tax deductible. Unfortun...Read more
House Approves Tax Deduction for LTC Insurance Premiums
- August 14th, 2002
The House of Representatives has passed a bill that would allow middle-income taxpayers to take a deduction for the cost of long-term care insurance premiums without itemizing. Long-term care insurance premiums can be deducted under current law, but a taxpayer must itemize and the amount that can be deducted must be more than 7.5 percent of income when combined with other medical expenses.
Under the House bill, H.R. 4946, individuals earning $20,000 to $40,000 in adjusted gross income and married couples filing jointly and earning $40,000 to $80,000 would be eligible for the deduction. The taxpayer would have to pay at least half of the insurance premium to qualify. The measure also would permit a personal tax exemption of $3,000 in 2002 for taxpayers who act as a long-term caregiver for a family member.
Although the bill passed by a vote of 362-61, Rep. Fortney "Pete" Stark (D-CA) called the measure "worthless' and 'a tremendous waste of the taxpayers'' money." Stark said the bill would help relatively few people at great cost to the government and that it appeared designed to "bail out the insurance industry."
The measure now awaits action by the Senate Finance Committee.
To read a copy of the House bill, go to http://thomas.loc.gov/ and enter 'HR4946" in the 'Bill Number' box.
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