Long-term care insurance protects you against the financial consequences of chronic illness or disability. Medicare covers no more than 100 days of skilled or rehabilitation care, and Medicaid requires low income to qualify.
Long-term care premiums are not cheap, but the tax code may let you write off some or all of the cost.
Why Your Entity Structure Decides Your Long-Term Care Insurance Deduction
How much you deduct depends on your choice of business entity. A full deduction is available in two situations.
If you operate as a C corporation, have the corporation provide the coverage as a tax-free fringe benefit and pay the carrier directly.
If you operate as a sole proprietorship or single-member LLC and your spouse is your only employee, have the business buy a qualified policy covering your spouse-employee, with you covered as the employee’s spouse, and pay the carrier directly. That deduction goes on Schedule C, where it also reduces your self-employment tax.
The Age-Based Caps on Long-Term Care Insurance
Otherwise, you face age-based caps. For 2026, they run from $500 at age 40 and below to $6,200 at age 71 and over. Two points worth knowing: the limits apply per insured person (so a married couple, both over 70, can count $12,400), and your age is your age at year-end (so if you turn 61 in December, you use the $4,960 limit for the whole year).
S corporation owners and partners deduct on Form 7206 subject to those caps, after the entity pays or reimburses the premiums and reports them properly.
Three Cautions Before You Buy
Three cautions:
- Buy a qualified policy.
- Most hybrid policies (life plus long-term care) produce no deduction unless the issuer separately states a qualified premium.
- If you have a Health Savings Account, it can pay these premiums tax-free up to the same caps.
How We Can Help
Sterling Tax and Accounting is here to help your business with tax planning! Our comprehensive approach to tax planning helps reduce your overall tax liability and keep more money in your pocket. If all your accountant does is file your taxes, chances are they are making you pay more than your fair share of taxes.
Learn how to proactively save on taxes by scheduling a call with our tax planning specialists.
Our tax planning, accounting & business services help you stay on track. Sterling Tax & Accounting will work with you to optimize your business and minimize your taxes. We will work to provide you and your business with the tools and resources you need to build a solid tax and business foundation. We’re a trusted CPA Firm in Sarasota, Florida. We serve clients all over the US, and proactively work to minimize their taxes.
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