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Long-Term Care Insurance Planning: LTC Deductions, Avoiding Taxation of Proceeds, Traditional vs. Hybrid Policies

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Thursday, July 20, 2023

Recorded event now available

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Join us for a webinar that delves into the long-term care (LTC) insurance choices and unravels the intricate web of tax implications. Our esteemed panel of certified financial planning experts is poised to guide you through the labyrinth of LTC tax deductions, ensuring you're equipped with the knowledge to safeguard your clients' financial well-being. Discover which taxpayers should prioritize LTC, and gain invaluable insights into the optimal age for purchasing LTC insurance in specific scenarios.

Description

While the significance of LTC coverage and its tax implications may often escape the attention of practitioners, it remains an indispensable aspect of any comprehensive financial plan. During this webinar, we will unveil the hidden potential behind LTC premiums, shedding light on the three crucial limitations that affect their deductibility. We'll demystify the requirements of itemization and the medical floor for deductions, which currently stands at 7.5 percent of adjusted gross income. Additionally, we'll explore the age-based limitations that dictate the deductible amount, ranging from $480 for taxpayers aged 40 or below to a maximum of $5,960 for those 70 years or older in 2023.

Our panel will delve into the definition of chronically ill individuals, as outlined in IRC section 7702B(b)(2), shed light on the eligibility criteria for avoiding taxation on LTC proceeds. We'll explore the comprehensive coverage of those who cannot perform at least two activities of daily living for an extended period, as well as individuals who require substantial supervision due to severe cognitive impairment. By providing clarity on these critical distinctions, we aim to equip tax advisers and financial planners with the fundamental understanding required to optimize their clients' financial health.

Prepare to expand your knowledge of LTC insurance policies and their nuances, enabling you to identify the most suitable candidates for this essential coverage. Our esteemed insurance experts will discuss the benefits of both traditional and hybrid/linked-benefit policies, empowering you with the tools to make informed recommendations to your clients. Gain a comprehensive understanding of policy differences, ensuring you possess the expertise to navigate this complex landscape.

Listen as our panel of insurance experts discusses recommending LTC insurance for tax advisers working with individual taxpayers.

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Outline

  1. Introduction – Understanding long-term care insurance
  2. Long-Term Care Insurance Basics
    1. Definition of long-term care insurance
    2. History and evolution of long-term care insurance
    3. Key terms of long-term care insurance
  3. Tax Considerations for long-term Care Insurance
    1. Understanding IRC Section 7702b and IRC Section 101G
    2. Annual tax deduction for premiums paid
    3. Employer paid LTC
    4. Taxation of benefits
  4. Traditional vs. hybrid/linked-benefit long-term care insurance
    1. Traditional long-term care insurance
    2. Hybrid life (annuity)
    3. Life/chronic illness
    4. Short-term care
  5. Identifying clients who need long-term care insurance
    1. Client assessment
    2. Risk assessment and analysis
    3. Family history, lifestyle, and health status
    4. Age, financial situation, and personal preferences

Benefits

During this engaging webinar, our panel will address these pivotal topics and more:

  • Mastering the art of avoiding taxation on LTC insurance proceeds
  • Determining the ideal age to purchase LTC insurance in specific circumstances
  • Untangling the complexities of hybrid and traditional LTC policies
  • Identifying taxpayers who are ideal candidates for LTC insurance

Faculty

Griffith, Thomas
Thomas (Tom) Griffith, CFP
Vice President
Cardinal Advisors

Mr. Griffith has been with Cardinal since 2013. He began his career at Cardinal Advisors at its first intern, offered...  |  Read More

Scheil, Hans
Hans (John) Scheil, CFP
Founder and CEO
Cardinal Advisors

Mr. Scheil is the author of The Complete Cardinal Guide and has over 40 years of experience specializing in...  |  Read More

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