With The Tax Qualified (TQ) Long Term Care Insurance Policies you can deduct some or all of your premiums from your federal and state income taxes as a medical expense. Your age, along with your medical expenses which exceed 7.5% of your adjusted gross income (AGI) will influence the actual amount that can be deducted. At your current age, the specific amount you can deduct each year increases by an amount that is calculated by the federal government. Each year your accountant or your insurance company can give you the information regarding your deduction with reference to your LTCI premiums. Benefits received under TQ policies will not be taxed as income.

The Non-Tax Qualified (NTQ) policy premiums can not be deducted from your income taxes. The benefits received under such a policy are also not tax free. However there are other advantages with NTQ policies. The NTQ LTCI policies under the federal law pay benefits sooner than TQ policies and may have more generous benefit triggers. While Tax Qualified policies only pay if you are unable to perform 2 Activities of Daily Living (ADLs) out of a list of 6, NTQ policies begin to pay benefits when you are unable to perform 2 activities of daily living out of a list of 7.

TQ policies require a health care professional to certify that you will need at least LTC services for at least 90 days. This verification is to establish that the LTC needed is not short term and this is not a waiting period before the benefits begin. Your insurance company will still be required to pay any benefits even if you didn’t need care for the full 90 days - except for the duration Medicare paid for your care if any.