Long term Care Insurance tax Deductions

By Ruth Cottle, Maine Bureau of Insurance

Be sure you have a State Certified Long Term Care Policy before taking a State of Maine Income Tax Deduction.

In order to be certified by the Superintendent of Insurance a Long Term Care Policy must comply with Chapter 68 of the Maine Insurance Code. This means that in order to be called a Long Term Care Policy in the State of Maine, the policy must include Nursing Home benefits and Home Health Care Benefits. The policy must be reviewed for compliance with the requirements of Maine insurance laws and rules. At the time of filing the insurer must request that the policy be certified for tax purposes in the State of Maine. Once a policy is determined to be in compliance, is approved and certified, it is placed on a list of certified policies. The list is forwarded to the Income Tax Division of Maine Revenue Services. The policies are approved by form numbers. This form number is located in the lower left-hand corner of the face page (first page) of the policy. When making a deduction on the State of Maine Income Tax Return a photocopy of that face page should accompany the Return. If the form number on the photocopy of the face page matches a form number on the List of Certified Long Term Care Policies in the State of Maine the deduction is allowed.

Deductions for Out-of-State Group Certificates such as Long Term Care Certificates issued through AARP are being disallowed because the certificates are not State Certified. If you have a Certificate purchased as a member of a group it probably is not State Certified. The Insurer either did not file the Certificates or did not request that the Certificates be State Certified in Maine. However, the National Education Association does have a State Certified Certificate, Form GC001 (ME) 796 LTC-1, through Life Investors Insurance Company of America.

Beginning January 1, 1997 Insurance Companies have been selling federally qualified policies. Nursing Home Policies or Home Health Care Policies as well as Long Term Care Policies can be federally qualified. Nursing Home Policies and Home Health Care Policies can not be State Certified. If a deduction for premium paid for Nursing Home Policies or Home Health Care Policies is taken, it will be disallowed.

It appears that even when a Maine insured contacts his/her insurance company or Certified Public Accountant wrong information is being given out. Maine insureds are being told that they can take a tax deduction because either they have a "qualified" policy or their policy is "grandfathered". It is not made clear that the "qualified" and "grandfathered" is for federal Income Tax purposes only. A "qualified" policy could also be State Certified if it meets the definition of a Long Term Care Policy according to Maine Law.

Before taking a deduction, please make sure that your policy or certificate is State Certified. You can contact the Bureau of Insurance at 800-300-5000 or 207-624-8455 to find out if your policy or certificate is on the List of Long Term Care Policies Certified for Tax Purposes in the State of Maine. CPAs are welcome to call too.

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Long term Care Insurance tax Deductions

Be sure you have a State Certified Long Term Care Policy before taking a State of Maine Income Tax Deduction.