The cost of tax-qualified LTC insurance premiums (LTC premiums) are deductible for federal income taxes as LTC is considered a medical expense. For an individual who itemizes tax deductions, medical expenses are deductible to the extent that they exceed 10% (7.5% for age 65 and older) of the individual's Adjusted Gross Income (AGI). The amount of the LTC premium treated as a medical expense is limited to the eligible LTC premiums, and is based on the age of the insured individual. That portion of the LTC premium that exceeds the eligible LTC premium is not included as a medical expense.

Individual taxpayers can treat premiums paid for tax-qualified LTC insurance for themselves, their spouse or any tax dependents (such as parents) as a personal medical expense.

The yearly maximum deductible amount for each individual depends on the insured's attained age at the close of the taxable year. For example, using the table below if the taxpayer is age 50 in 2016 the maximum deduction is $730 before application of the 10% AGI limitation. If the taxpayer is over age 70 in 2016 the maximum deduction is $4,870 and before application of the 7.5% AGI limitation. The limitation is 7.5% of AGI if age 65 or older. These deductible maximums are indexed and increase each year for inflation.

If you are self-employed, you can deduct 100 percent of premium amounts (up to the limit) you paid for long-term care insurance. Note that the policy must be "tax-qualified" to receive these benefits.