Did you know that you can use your health savings account to pay for your premiums for an eligible long-term-care policy. You should know that the amount that you can withdraw tax-free each year is based on your age at the end of the year. The older you are, the more you can withdraw tax-free. The amount increases slightly every year, and the limits are per person.
-In 2018, people who are 40 or younger can withdraw up to $420 tax-free from an HSA to pay their long-term-care premiums.
-People age 41 to 50 can withdraw $780, those age 51 to 60 can withdraw $1,560
-Those age 61 to 70 can withdraw $4,160, and if you’re 71 or older you can withdraw $5,200.
According to Kimberly Lankford, “To qualify for the tax-free HSA withdrawals or the tax deduction for long-term-care insurance premiums, the policy must be a "qualified long-term-care insurance contract," which includes most stand-alone long-term-care policies currently on the market. Ask your insurer if your policy is eligible. Life insurance policies that can also provide a long-term-care benefit don’t qualify.”
If you don't have an HSA or you don't use HSA money for these expenses, your long-term-care insurance premiums may be tax-deductible. To qualify for the medical-expense deduction in 2018, you must itemize, and your eligible medical expenses are deductible only to the extent that they exceed 7.5% of your adjusted gross income. Your state may offer an additional break from your state income taxes for qualified long-term-care insurance premiums.
Cosmo Insurance Agency is an independent insurance agency serving surrounding communities in New Jersey. Cosmo keeps its promise to assure an efficient and creative approach to the services we offer. Each of our clients experience a personalized and long-term relationship with us. Our New Jersey based team of health brokers guides our clients in helping them choose the most cost-effective options. By incorporating the latest in technology-based tools and laws on healthcare, employee benefits, life insurance and finance, we keep our clients up-to-date with the plans that encompass all of their needs, whether it is individual or group insurance.
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