Short Term Care Premiums

[secrtkeper]

Can I deduct short term/recovery care insurance policy premiums that would cover home or facility based care? Typically purchased to supplement a Long Term Care policy's 90 day elimination period.  If so, where to add in Medical Expenses?

[ToddL99 · Accepted solution]

Yes, you can deduct short term/recovery care insurance policy premiums that would cover home or facility based care. 

These would be entered in the Medical Expenses interview of Deductions and Credit (see attached screen shot). Just include these STC premiums with other medical insurance premiums in the first box

To deduct unreimbursed, out-of-pocket medical, dental, and vision costs on your federal return:

• You must take the itemized deduction;
• The expenses for you, your jointly-filing spouse, and your dependent(s) must exceed 7.5% of your AGI (adjusted gross income); and
• Only the portion above and beyond 7.5% of your AGI is deductible.

[JRuby2004]

Thanks for the answer @ToddL99, this is good to hear. However, just to confirm, it appears that there are a lot of rules and nuances about when long term care (LTC) insurance premiums are deductible. Unlike medical insurance and long term care insurance, short term/recovery care policies are often not heavily regulated (if regulated at all), and as a result, it would be difficult to determine if the same rules and nuances that apply to LTC also apply to short term care premiums.  Therefore, is it fair to say that any and all short term care / recovery insurance premiums are tax deductible to the same degree as a run of the mill medical insurance policy?

[ToddL99]

Yes. 

[ToddL99]

Yes, insurance premiums for short term medical coverage ("care", "recovery", etc.) are tax deductible to the same degree as premiums for more conventional ("longer-term") medical insurance.

"Short-term" medical insurance (of any kind) is just a description used for policies intended to bridge lapses in more permanent coverage - and are priced accordingly.

Long-Term Care policies are very different in both cost (higher) and benefits than conventional medical insurance policies, hence they attract more attention from regulators.  

A long-term care insurance policy helps cover the costs of that care when you have a chronic medical condition, a disability or a disorder such as Alzheimer’s disease. Most policies will reimburse you for care given in a variety of places, such as:

• Your home.
• A nursing home.
• An assisted living facility.
• An adult day care center.

[JRuby2004]

To clarify, the type of short-term care policy I am referring to (and possibly the original poster, but I am not sure) is identical in nature to a long-term care policy. The only main difference is that the insurance benefit (usually a cash indemnity) is for a shorter period of time (and short-term care policies are not regulated in the same way as long-term care policies). Both policies require impairments to at least one activity of daily living (ADL), and/or a chronic medical condition, a disability or a disorder, and they will pay for/reimburse costs for home health care, aides, assisted living, etc.

There are health insurance policies that can be short term in nature, like a few months when between employers or some time on a COBRA policy, but that is different from the short-term policy I am describing.

Given the above, does that change your opinion on the deductibility of short-term care insurance premiums?

[DaveF1006]

No. That doesn't change any of our opinions because I don't think the IRS has defined this to the degree that you just mentioned. ToddL99 has defined this beautifully in his previous post.