OHIO ELDER LAW BLAWG

Long Term Care Insurance Premium Deductability for the Self Employed

Qualified long-term care insurance premiums can be claimed as a self-employed health insurance deduction in 2010, subject to the following limits:

 

Age of Covered Person	2010 Limit
40 or younger	$330
41 to 50	$620
51 to 60	$1,230
61 to 70	$3,290
Over 70	$4,110

A Roundup of Key Elder Law Numbers for 2010

Below are figures for 2010 that are frequently used that may be of interest to my clients.

Medicaid Spousal Impoverishment Figures for 2010 Unchanged From 2009

The minimum community spouse resource allowance (CSRA) remains $21,912, as does the maximum CSRA, $109,560. The maximum monthly maintenance needs allowance remains $2,739. The minimum monthly maintenance needs allowance remains $1,821.25 until July 1, 2010.

For the CMS document announcing the unchanged 2010 figures, click here.

Income cap: Because the SSI federal benefit rate was unchanged, the income cap for 2010 applicable in "income cap" states should remain $2,022 a month.

Annual Gift Tax Exclusion Stays at $13,000

The annual gift tax exclusion remains at $13,000.

Long-Term Care Premium Deductibility Limits for 2010

The Internal Revenue Service has announced the 2010 limitations on the deductibility of long-term care insurance premiums from taxes. Any premium amounts above these limits are not considered to be a medical expense.

Attained age before the close of the taxable year	Maximum deduction
40 or less	$330
More than 40 but not more than 50	$620
More than 50 but not more than 60	$1,230
More than 60 but not more than 70	$3,290
More than 70	$4,110

Benefits from per diem or indemnity policies, which pay a predetermined amount each day, are not included in income except amounts that exceed the beneficiary's total qualified long-term care expenses or $290 per day (for 2010), whichever is greater.

For details from the American Association for Long-Term Care Insurance, click here.

Medicare Premiums, Deductibles and Copayments for 2010

• Basic Part B premium: $110.50/month (was $96.40) (But most beneficiaries will not pay this increase due to a "hold-harmless" provision in the Medicare law prohibiting Part B premiums from rising more than that year's cost of living increase in Social Security benefits. For more, click here.)

• Part B deductible: $155 (was $135)

• Part A deductible: $1,100 (was $1,068)

• Co-payment for hospital stay days 61-90: $275/day (was $267)

• Co-payment for hospital stay days 91 and beyond: $550/day (was $534)

• Skilled nursing facility co-payment, days 21-100: $137.50/day (was $133.50)

Premiums for higher-income beneficiaries:

• Individuals with annual incomes between $85,000 and $107,000 and married couples with annual incomes between $170,000 and $214,000 in 2010 will pay a monthly premium of $154.70.
• Individuals with annual incomes between $107,000 and $160,000 and married couples with annual incomes between $214,000 and $320,000 in 2010 will pay a monthly premium of $221.
• Individuals with annual incomes between $160,000 and $214,000 and married couples with annual incomes between $320,000 and $428,000 in 2010 will pay a monthly premium of $287.30.
• Individuals with annual incomes of $214,000 or more and married couples with annual incomes of $428,000 or more in 2010 will pay a monthly premium of $353.60.

Rates differ for beneficiaries who are married but file a separate tax return from their spouse:

• Those with incomes between $85,000 and $128,000 will pay a monthly premium of $287.30.

• Those with incomes greater than $128,000 will pay a monthly premium of $353.60.

For more information, click here.

Social Security Benefit Changes for 2010

Monthly Social Security and Supplemental Security Income (SSI) benefits will not automatically increase in 2010 as there was no increase in the Consumer Price Index (CPI-W) from the third quarter of 2008 through the third quarter of 2009. For other important 2010 Social Security information, click here.

Briefing on The Class Act Released by Kaiser Family Foundation

Two of the three leading health reform proposals under consideration in Congress include the Community Living Assistance Services and Supports (CLASS) Act, which would allow for voluntary pre-financing of long-term care through payroll deductions and then provide a cash benefit to purchase services.

On October 20, the Kaiser Family Foundation hosted a briefing titled "The Sleeper in Health Reform: Long-term Care and The CLASS Act" featuring some of Washington's leading experts on the legislation. Click on the link below for a webcast, podcast, issue brief and more.

Go to the CLASS Act briefing page

LTC Premiums: How Much Can I Deduct?

The Internal Revenue Service has announced the 2010 limitations on the deductibility of long-term care insurance premiums from taxes. For the first time, the maximum deductible limit for an individual exceeds $4,000. Premiums for "qualified" (see explanation below) are tax deductible provided that they, along with other unreimbursed medical expenses, exceed 7.5 percent of the insured's adjusted gross income. These premiums -- what the policyholder pays the insurance company to keep the policy in force -- are deductible for the taxpayer, his or her spouse and other dependents. (If you are self-employed, the tax-deductibility rules are a little different: You can take the amount of the premium as a deduction as long as you made a net profit; your medical expenses do not have to exceed 7.5 percent of your income.) However, there is a limit on how large a premium can be deducted, depending on the age of the taxpayer at the end of the year. Following are the deductibility limits for 2010. Any premium amounts for the year above these limits are not considered to be a medical expense. Attained age before the close of the taxable year Maximum deduction for year 40 or less $330 More than 40 but not more than 50 $620 More than 50 but not more than 60 $1,230 More than 60 but not more than 70 $3,290 More than 70 $4,110 What Is a "Qualified" Policy? To be "qualified," policies issued on or after January 1, 1997, must adhere to certain requirements, among them that the policy must offer the consumer the options of "inflation" and "nonforfeiture" protection, although the consumer can choose not to purchase these features. Policies purchased before January 1, 1997, will be grandfathered and treated as "qualified" as long as they have been approved by the insurance commissioner of the state in which they are sold.  The Taxation of Benefits Benefits from reimbursement policies, which pay for the actual services a beneficiary receives, are not included in income. Benefits from per diem or indemnity policies, which pay a predetermined amount each day, are not included in income except amounts that exceed the beneficiary's total qualified long-term care expenses or $290 per day (for 2010). When a business purchases a tax-qualified long-term care insurance policy on behalf of any of its employees, or their spouses and dependents, the corporation is entitled to take a 100 percent deduction as a business expense on the total premium paid. The deduction is not limited to the aged-based eligible premiums listed above. For details on these and other long-term care insurance tax-advantaged rules, click here. The Georgetown University Long-Term Care Financing Project has a two-page fact sheet, "Tax Code Treatment of Long-Term Care and Long-Term Care Insurance." To download it in PDF format, go to: http://ltc.georgetown.edu/pdfs/taxcode.pdf (If you do not have the free PDF reader installed on your computer, download it here.)