IRS increases tax deductions for long-term care insurance Posted: November 4th, 2010

Each year, the IRS allows Americans to deduct a portion of their health care costs on their federal income tax form. According to tax guidelines, medical expenses in excess of 7.5 percent of a household's adjusted gross income are eligible for the deduction.

While long-term care insurance premiums fall under the definition of a medical expense, their deductibility has been limited. The IRS recently announced that in 2011, it would increase the amount of long-term care premiums that can be deducted on tax forms next year.

Under the new guidelines, taxpayers can deduct the following premium amounts, depending on their age:

• Age 40 or younger: $340
• Ages 41-50: $640
• Ages 51-60: $1,270
• Older than age 61: $3,390

The IRS uses an individual's age at the end of the year to determine which deduction category a taxpayer will fall.

Medicare and most private medical insurance policies do not provide coverage for long-term care. Long-term care policies supplement traditional health insurance and provide coverage for services administered in assisted living, adult foster care and nursing homes.