Question

are Long term care insurance payouts to me taxable?

Forum|Forum|3 years ago
November 16, 2022
1 reply
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My husband went into Memory Care facility in March. His Long Term Care insurance kicked in June 5 after a 90-day deductible period. It will pay out approx. $22,000 in 2022 directly to me. I will pay approx $68,000 directly to the facility. LTC policy was purchased in 2000 for $35,000 with no further premiums required. I am told it is a tax-qualified policy because they will send out a 1099R form to me. Two questions: (1) Is payment from LTC taxable income? (2) Is amount I pay to facility deductible as a medical expense or other expense?

M

mfields2

Generally, the payments from a long term care insurance policy are not taxable.

In your situation, the payments would be an offset against the overall medical bills that you report as part of your itemized deductions. So if you have $68,000 of long term facility costs and $22,000 of reimbursement, you have a net bill of $46,000. Make sure you report this, as it is a federal tax deduction (if it exceeds 7.5% of your income) and many states allow a similar deduction on your state tax return.

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