Based on the Health Insurance Portability and Accountability Act (HIPAA), individuals who itemize their deductions and whose medical expenses exceed 7.5% of their AGI floor can deduct the premiums on tax-qualified policies as follows.

2008 Per-Diem Tax-Free Limit (indemnity or cash benefit) is $270 (up from $260 in 2007).  This means the first $270 per day or the actual cost of care is tax-free.

For example: Sara has a $300 per day cash benefit. She only needs $150 per day. Since it is a cash benefit, she will receive the entire $300. She is taxed not on $150 but on $30 – the difference between $300 and the tax-free limit of $270. 

NYS Tax Credit for 2007

New York State taxpayers who pay premiums for qualified long-term care insurance may claim a credit against their personal income tax. 

 

For 2007, this credit is equal to 20% of premiums paid during the tax year

for the purchase of or for continuing coverage under a qualifying long-term care insurance policy.

New York State Tax Form IT 249

Additional Tax Materials:

Complete list of state tax deductions and credits

Learn more about the tax benefits of LTCI for individual tax payers, employees, C corporations, S corporations and more.  See One Page Tax Summary.

Since every individual's tax situation is unique, some of the information stated above may not apply to you.  It is essential you review this information with your tax professional.