Are long-term care insurance premiums tax deductible in 2020?

Yes, long-term care insurance (LTCI) premiums were tax-deductible in 2020 under federal tax rules, provided the policy was a tax-qualified contract.

How the Federal Deduction Worked in 2020

• Itemized Medical Expenses: For individual taxpayers, qualified LTCI premiums could be deducted as a medical expense on Schedule A (Form 1040).
• AGI Threshold: To claim this deduction, your total unreimbursed medical expenses (including LTCI premiums) had to exceed 10% of your Adjusted Gross Income (AGI) for tax year 2020.
• Age-Based Limits (IRS Rev. Proc. 2019-44): The amount of the premium you could count as a medical expense was capped based on your age at the end of 2020:
  • Age 40 or less: Up to $430
  • Age 41 to 50: Up to $810
  • Age 51 to 60: Up to $1,630
  • Age 61 to 70: Up to $4,350
  • Age 71 or older: Up to $5,430
• Self-Employed Individuals: Self-employed taxpayers could generally deduct 100% of their out-of-pocket qualified LTCI premiums (up to the same age-based limits above) as an above-the-line deduction without needing to meet the AGI percentage threshold, provided the business showed a net profit.

Key Requirements

• Tax-Qualified Policy: The policy had to meet federal HIPAA standards (such as being guaranteed renewable and not having a cash surrender value). Most hybrid life/annuity policies with long-term care riders did not qualify for these premium deductions.
• State-Level Rules: Some states offered separate state-specific tax deductions or tax credits (such as New York’s long-term care insurance credit) for qualifying policies.

Yes, long-term care insurance premiums can be deducted from federal taxes, but only if the policy is "tax-qualified" and your total medical expenses exceed 7.5% of your adjusted gross income (AGI).

How the Deduction Works for Individuals

• Itemize Deductions: You must itemize your deductions on Schedule A rather than take the standard deduction.
• 7.5% AGI Threshold: Your qualified long-term care premiums must be combined with other unreimbursed medical expenses. The total amount that goes beyond 7.5% of your AGI is what you can deduct.
• Age-Based Limits: The IRS caps the amount of premium you can include as a medical expense based on your age at the end of the tax year.

2026 IRS Premium Deduction Caps (Per Person)

• Age 40 or younger: $500
• Age 41 to 50: $930
• Age 51 to 60: $1,860
• Age 61 to 70: $4,960
• Age 71 or older: $6,200

(For couples, both spouses can apply these limits to their individual premiums, doubling the potential deduction if both are insured.)

Rules for Self-Employed Individuals

• No Itemizing Required: If you are self-employed and show a net profit, you may deduct 100% of your out-of-pocket premiums directly on Page 1 of Form 1040.
• No Threshold: You do not have to clear the 7.5% AGI medical expense threshold to claim this self-employed health insurance deduction.
• Restrictions: You cannot take this deduction if you are eligible for coverage under an employer health plan (such as through a spouse's job).

Suze Orman strongly Suze Orman: The Importance of Long-Term Care Insurance advocates for long-term care insurance (LTCi) as essential family protection to prevent later-life care costs from wiping out retirement savings.

Core Beliefs and Warnings

• High Costs: She warns that home care, assisted living, and nursing facilities can cost anywhere from $5,000 to $25,000 a month.
• Medicare Limits: She notes that Medicare and regular health insurance cover very little extended custodial care (typically only short post-hospitalization windows).
• Personal Experience: Drawing from spending over $2 million on her own mother's late-life care, she urges people not to leave loved ones or inheritances vulnerable to these expenses.

Key Recommendations for Buyers

• Buy in Your 50s or 60s: She states that people in their 50s and early 60s should seriously consider coverage, warning that premiums skyrocket significantly after age 60.
• Only Buy What You Can Afford Long-Term: She stresses that you should purchase a policy only if you can comfortably sustain the premiums, even if they face future price hikes (potentially up to 40% or more).
• Partial Coverage is Fine: Instead of abandoning an expensive policy that covers 100% of costs, she advises buying a smaller policy that covers 25% to 50% of anticipated expenses if that fits your budget.
• Include Inflation Protection: She insists on incorporating a compound inflation adjustment (such as a 5% annual rider) so the daily benefit keeps pace with rising medical costs.
• Explore Alternatives: If traditional LTC insurance is too expensive or you cannot medically qualify, she suggests looking into hybrid policies (combining life insurance/annuities with care riders) or fixed index annuities equipped with care riders.

Taxpayers aged 65 or older by the end of the tax year with a modified adjusted gross income below specific limits are eligible for the $6,000 senior tax deduction.

Key Eligibility Requirements

• Age: You must be at least 65 years old by the final day of the tax year.
• Identification: You must include a valid Social Security number on your tax return.
• Filing Status for Married Couples: If you are married, you must file a joint return to qualify. Married individuals filing separately are not eligible.
• Deduction Type: You can claim the deduction whether you take the standard deduction or choose to itemize.

Income Limits and Phase-Outs

The full $6,000 deduction is available per eligible individual ($12,000 for married couples if both spouses are 65 or older) up to specific income thresholds:

• Single Filers: The full amount is available if your modified adjusted gross income (MAGI) is $75,000 or less. The deduction phases out gradually and drops to $0 once your MAGI reaches $175,000.
• Joint Filers: The full amount is available if your combined MAGI is $150,000 or less. The deduction phases out and drops to $0 once your combined MAGI reaches $250,000.
• Phase-Out Rate: The deduction is reduced by 6 cents for every dollar your income exceeds the initial threshold ($75,000 for single filers, $150,000 for joint filers).

You can review official guidelines and confirm details directly with the Internal Revenue Service. Additional breakdowns are also outlined by platforms like TurboTax and CNBC Select.

State and local sales taxes (instead of state income taxes) and out-of-pocket charitable expenses are widely considered among the most frequently missed tax breaks by filers.

Because tax software and standard checklists often focus on big-ticket items like mortgages and major cash donations, smaller or flexible write-offs slip through the cracks. Review the most commonly overlooked deductions below to see if you qualify.

Top Overlooked Deductions

• State Sales Tax vs. Income Tax: You can choose to deduct either your state and local income taxes or your state and local general sales taxes. This is especially helpful if you live in a state with no income tax (like Florida or Texas) or if you made a major purchase like a car or boat during the year.
• Out-of-Pocket Charitable Contributions: Cash donations get all the attention, but non-cash items (like clothing or household goods given to charity) and the standard mileage rate for driving to volunteer work are fully deductible.
• State Income Taxes Owed from Prior Year: If you paid additional state income tax when you filed your previous year's state return, that extra amount paid can often be deducted on your federal return for the year you actually paid it.
• Reimbursements and Premiums for Self-Employed: If you are self-employed, you might forget to write off health insurance premiums, qualified Medicare premiums, or standard mileage for business trips that weren't tracked through a formal payroll.
• Out-of-Pocket Classroom Expenses: Eligible educators can deduct unreimbursed expenses for books, supplies, and equipment used in the classroom.

You can read more detailed checklists on the TurboTax Guide to Overlooked Deductions or explore H&R Block's Deduction Overview.