Hybrid long term care insurance, unlike traditional long term care insurance, includes a life insurance death benefit, which ensures that even if you need to use the long term care benefits, the policy will provide a significant payout to your beneficiary.
This feature, in addition to the fact that hybrid policies are not subject to the volatile premium increases associated with traditional LTC plans, make hybrid policies an attractive alternative to the traditional LTC insurance model.
However, many buyers also wonder about the tax deductibility of these policies.
Premiums on traditional long term care insurance plans are usually deductible, so what about hybrids?
The answer is that some hybrid products offer tax deductibility and some do not.
Products that currently offer tax deductibility of premiums include OneAmerica AssetCare, Nationwide CareMatters II, and Securian SecureCare. Products that do not offer tax deductibility include Lincoln Moneyguard, Pacific Life PremierCare, and Brighthouse SmartCare.
According to Jesse Slome, the director of the American Association for Long Term Care Insurance, the most significant tax benefits are available for businesses that are formed as C-Corporations. He goes on to say that "every small and mid-sized business owner looking for tax and planning advantages would benefit by learning more."
The tax advantages are not just limited to C-Corporations. Any individual who itemizes tax deductions can deduct the premiums of a tax-qualified policy as a medical expense. Long term care insurance premiums are deductible if the premiums exceed 10% of adjusted gross income (AGI).
As always, you should consult with a tax professional to review your specific situation and find the strategies that are right for you.
Because not all hybrids offer tax deductibility, it can be an important point of comparison when looking at quotes and trying to find the best option. Other important points of comparison are:
- Benefit payout type -- indemnity or reimbursement
- Inflation riders (applied to the LTC benefit amount)
- Premium payment options (single-pay, 10 pay, ongoing annual premiums, etc.)
- Return of premium options
At Hybrid Policy Advisor, we compare quotes from all of the major hybrid LTC products on the market. As an independent agency, we are dedicated to finding the best long term care solutions for every client we serve.
If you would like to learn more, please give us a call at 1-866-365-6558, or click the button below to fill out a quote request form. We look forward to hearing from you.