.png)
BetterWealth
January 6, 2026
Many people wonder if long-term care premiums are tax-deductible for life insurance, especially as care costs keep rising. The idea of getting coverage and a tax break sounds appealing. The problem is that the rules are confusing, and many policies do not qualify the way people expect.
At BetterWealth, we see this frustration all the time. People assume that adding long-term care to a life insurance policy automatically creates a tax deduction. In reality, the IRS has strict definitions, age-based limits, and itemization rules that can change the outcome.
This guide breaks down how long-term care premiums work with life insurance, when deductions may apply, and where most people get tripped up. You will learn what qualifies, what does not, and how to avoid costly assumptions before filing your taxes.
Long-term care premiums can be tax deductible when you pair them with certain life insurance policies. The rules depend on the policy type and your situation. Hybrid policies that blend life insurance with long-term care benefits have their own tax quirks.
Long-term care premiums are what you pay to insure against the cost of extended care, think help at home, assisted living, or a nursing home.
Most people need this kind of coverage when they can’t handle daily activities alone because of age, illness, or disability. Premiums vary a lot based on your age at purchase, how much coverage you want, and what benefits you select.
The IRS sets yearly limits on how much you can deduct as medical expenses. For 2025, those limits go up as you age. You can only deduct premiums that fit within these age-based caps.
Tax-qualified long-term care insurance must meet specific IRS rules. Your policy needs to cover chronic illness or conditions that require significant help with daily living.
Hybrid policies combine life insurance and long-term care benefits in one package. You pay premiums that serve two purposes: they provide a death benefit and also cover long-term care if you need it.
When you add long-term care riders to a life insurance policy, you can tap into your death benefit while you’re still alive to help pay for care. Of course, this means your beneficiaries get less later.
The tax treatment of these hybrid policies isn’t the same as standalone long-term care insurance. You’ve got to make sure your policy meets IRS requirements for tax-qualified long-term care.
Only the part of your premium that goes toward long-term care can be deducted. Not every policy with long-term care features qualifies, so read the fine print or, honestly, just ask a tax pro.
Long-term care insurance premiums might be tax deductible as medical expenses under federal law, but there are strict limits based on your age and total medical costs. The IRS treats qualified long-term care insurance differently from regular life insurance.
The IRS lets you deduct premiums for qualified long-term care insurance as medical expenses on your federal return. You can claim these for yourself, your spouse, and dependents.
But here’s the catch: you can only deduct medical expenses that exceed 7.5% of your adjusted gross income (AGI). You need pretty hefty medical costs for this to matter.
For instance, if your AGI is $50,000, expenses need to top $3,750 before you can deduct anything. Only the amount above that counts.
The IRS sets annual deduction caps for long-term care premiums, based on your age at year-end. These limits rise as you get older (because insurance gets pricier).
2025 IRS Deduction Limits:
You can’t deduct more than these amounts, no matter what you actually pay. If you’re 55 and pay $6,000 in premiums, only $1,760 counts.
Not every long-term care policy qualifies for tax deductions. The IRS has a checklist for what counts as a qualified long-term care insurance contract.
A qualified contract only covers long-term care services. It can’t pay you cash benefits based on time or build cash value as permanent life insurance does.
It also must be guaranteed renewable and can’t have a cash surrender value. Some hybrid life insurance policies with long-term care riders might qualify, but only the long-term care portion is deductible.
Life insurance with long-term care riders blends death benefits with living benefits for care expenses. The rules for splitting and taxing premiums can get weird.
A long-term care rider is an add-on you can stick onto a permanent life insurance policy. It lets you dip into your death benefit while you’re alive to cover long-term care.
The rider pays out if you become chronically ill and need help with daily activities. That includes costs for nursing homes, assisted living, or home health aides. You’ll need a care plan from a licensed healthcare provider to qualify.
If you use the rider, your policy’s death benefit drops by however much you spend on care. If you never need long-term care, your beneficiaries get the full death benefit. It’s a flexible setup, honestly.
Hybrid policies break your premium into two parts: life insurance and the long-term care rider. The insurance company decides how much goes where, based on your age, health, and coverage.
Most policies don’t spell out these costs on your statements, so it’s tough to know exactly what you’re paying for care versus insurance. If you want to claim a tax deduction, you’ll need a written breakdown from your insurer showing the cost of the rider separate from the base premium.
Your life insurance death benefits stay tax-free for your beneficiaries. The long-term care rider? That’s different.
Only the premium amount that goes to the long-term care rider might be deductible as a medical expense if you itemize and your total medical expenses exceed 7.5% of your AGI.
Deduction limits are based on age, and for 2025, they range from a few hundred to several thousand dollars.
Payments you get from the long-term care rider are usually tax-free up to certain daily limits. Double-check your policy’s IRS status with a tax professional.
You’ll need to itemize deductions on Schedule A to claim long-term care insurance premiums. Only the portion of your total medical expenses that exceeds 7.5% of your AGI counts.
To deduct long-term care insurance premiums, file Schedule A with your Form 1040. This means you’re skipping the standard deduction.
Your long-term care premiums show up as medical expenses. You can lump them together with other qualifying costs like doctor visits, prescriptions, and hospital bills. The premiums you paid for yourself, your spouse, or dependents all count.
Keep solid records of premium payments, insurance statements, receipts, and cancelled checks, all of it. If the IRS comes knocking, you’ll need proof.
Only medical expenses above 7.5% of your AGI are deductible. That rules out a lot of folks.
Here’s how it works:
If your AGI is $60,000, 7.5% is $4,500. You need more than $4,500 in medical expenses to deduct anything. Say you rack up $7,000 in qualifying expenses, you can deduct $2,500. Age-based limits on long-term care premiums still apply, and they change every year.
State tax rules for long-term care insurance premiums are all over the place. Some states offer extra deductions beyond federal rules. Employer-sponsored life insurance with LTC riders might also get special tax treatment, depending on the setup.
Some states give their own tax breaks for long-term care insurance premiums, on top of federal deductions. A few let you deduct the full premium on your state tax return, while others cap it at certain amounts.
States like California, Colorado, and New York offer tax credits or deductions that can lower your state taxes. These perks apply whether you have a standalone LTC policy or a hybrid life insurance policy with LTC riders.
Rules vary a lot, so check with your state insurance department or tax authority. If your state doesn’t have income tax, well, this part doesn’t matter.
Some states require you to itemize on your state return to claim LTC premium deductions. You might even qualify for state deductions when you don’t hit the federal threshold.
Your employer might offer life insurance with long-term care riders as part of your benefits. These policies get different tax treatment than ones you buy yourself.
If your employer pays the premiums, coverage up to $50,000 is generally tax-free for you. If there’s an LTC rider, the tax rules depend on whether the LTC part is a qualified contract.
Premiums you pay for employer-sponsored LTC coverage through payroll deductions might be deductible as medical expenses, subject to age-based limits. Some employers let you pay these premiums pre-tax through cafeteria plans, so you see savings right away.
Understanding whether long-term care premiums are tax deductible for life insurance comes down to details most people overlook. Only certain policies qualify, only part of the premium may count, and age-based limits plus itemization rules often reduce the benefit. Missing one requirement can mean no deduction at all.
At BetterWealth, we focus on helping people avoid assumptions that lead to tax surprises. Knowing how long-term care riders, hybrid policies, and IRS rules actually work puts you in a stronger position to plan ahead instead of reacting later.
If you want clarity before making decisions or filing your return, schedule a free Clarity Call. A simple conversation can help you understand your options, avoid common mistakes, and move forward with confidence.
Long-term care premiums may be tax deductible when they are tied to a qualified long-term care benefit within a life insurance policy. Only the portion of the premium allocated to long-term care is eligible. The life insurance portion itself is not deductible.
No. The policy must meet IRS standards for tax-qualified long-term care insurance. Some life insurance policies include riders that do not qualify, which means no deduction is allowed even if long-term care benefits are included.
Yes. Long-term care premiums are treated as medical expenses. You must itemize deductions and exceed 7.5% of your adjusted gross income (AGI) before any deduction applies.
Yes. The IRS sets age-based annual limits on deductible long-term care premiums. Even if you pay more, you can only deduct up to the maximum allowed for your age.
Yes. You can deduct qualified long-term care premiums paid for your spouse or dependents, as long as the policy is tax-qualified and you meet itemization and AGI requirements.
Hybrid policies divide premiums between life insurance and long-term care coverage. Only the portion allocated to long-term care may be deductible. You usually need documentation from the insurer showing this breakdown.
In most cases, benefits paid from a qualified long-term care rider are tax-free, up to IRS daily limits. Tax treatment depends on whether the rider meets qualified long-term care standards.
Yes. Some states offer additional deductions or tax credits for long-term care insurance premiums. State rules can differ significantly from federal guidelines and may apply even if you do not itemize federally.
Yes. Self-employed individuals may deduct qualified long-term care premiums as an above-the-line deduction, subject to age-based limits. This deduction does not require itemizing.
The most common mistake is assuming all life insurance premiums with long-term care features are deductible. In reality, qualification rules, premium allocation, and income thresholds often eliminate or reduce the deduction.
.svg){kind=logo}
