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The IRS has announced decreased tax-deductible limits for long-term care insurance for 2024, according to the American Association for Long-Term Care Insurance (AALTCI).

“This is a significant change in practice after yearly increases,” said Jesse Slome, director of AALTCI. “The 2024 deductible limits are still significant and few people, especially business owners, are aware that premiums paid for long-term care insurance may be tax-deductible.”

The just-announced 2024 limits for an individual age 70 or over is $5,880, according to AALTCI. The 2023 maximum deductible limit for that age band is $5,960.

“This is still a significant tax deduction,” Slome explained. “Most policies are purchased by couples, which means they could deduct up to $11,760 next year depending on their age.”

Only long-term care policies that meet the federal government’s tax-qualified requirements qualify for a potential tax deduction, Slome noted. “Most of the linked benefit or hybrid life insurance policies, the ones more popular today, do not qualify for a possible tax benefit.”

“Two types of individuals can gain the most benefit from the IRS deductions,” he added. “First, business owners, who may be able to deduct the full cost of their insurance protection and have a paid-in-full policy when they reach retirement age.”

Secondly, people who have retired from jobs can benefit. “That’s when income levels enable more people to reach the required health expense threshold to make premiums deductible,” Slome acknowledged.

“That potential tax deduction can be a huge benefit after retirement and something seniors should take into consideration when looking into their long-term care protection options.”

The following are the new 2024 deductible limits per-individual (2023 limits in brackets) from https://www.aaltci.org/tax:

Attained Age Before Close of Taxable Year 2024 Limit (2023)

• Age 40 or less: $470 ($480)

• Older than 40 but not older than 50: $880 ($890)

• Older than 50 but not older than 60: $1,760 ($1,7,90)

• Older than 60 but not olderthan 70: $4,710 ($4,770)

• Older than 70: $5,880 ($5,960)

The American Association for Long-Term Care Insurance advocates for the importance of planning and supports insurance and financial professionals who provide long-term care financing solutions.

To see prior year’s long-term care insurance tax deductible limits, visit the organization’s website at https://shorturl.at/imEG3.