By 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.
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.
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 higher $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:
- 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 (HSA), it can pay these premiums tax-free up to the same caps.
If you want to discuss business deductions for long-term care insurance, please call me on my direct line at 408-778-9651.