Skloff Financial Group
  • Home
  • The Firm
    • Advisor Biography
    • How We Are Different
    • The Company
    • The Process
  • Wealth Management
    • 401(k) Account Management
    • 403(b) Account Management
    • 457(b) Account Management
    • Investment Management
  • Financial Planning
    • College Planning
    • Estate Planning
    • Retirement Planning
    • Tax Planning
  • Group Benefits
    • 401(k) Plans
    • 403(b) Plans
    • 457(b) Plans
    • Insurance Plans
  • Insurance
    • Annuities
    • Disability Insurance
    • Life Insurance
    • Long Term Care Insurance
  • Information
    • Articles
    • Slides
    • Videos
  • Blog
  • Contact
    • Contact Information
    • Disclosures
    • Privacy Policy
  • Search
  • Menu Menu

Long Term Care Insurance Tax Free with Health Savings Account (HSA) – Long Term Care University – 02/15/20

February 15, 2020/in ARTICLES CATEGORIES, Estate Planning, Financial Planning, Insurance, Long Term Care, Long Term Care Insurance, Retirement Planning, Taxes /by f2819644

Adobe-PDF-Document-icon

 

 

Long Term Care University – Question of the Month – 02/15/20
Research
By Aaron Skloff, AIF, CFA, MBA

Q: Can we pay for our long term care insurance polices on a tax free basis?

The Problem – Paying for Long Term Care Insurance with After Tax Dollars

The Internal Revenue Code is loaded with tax benefits to encourage you to save for retirement through vehicles like 401(k) plans and Individual Retirement Accounts (IRAs).  Unfortunately, paying for long term care insurance on a tax free basis is much less understood.

Click Here for Your Long Term Care Insurance Quotes

freeltcquotes

The Solution – Paying for Long Term Care Insurance on a Tax Free Basis

While companies have many ways to pay for long term care insurance on a tax free basis, individuals have fewer choices.  Let’s look at the tax implications of paying on an after tax versus tax free basis, then two solutions to pay on a tax free basis.

Click to Enlarge

Health Savings Account (HSA) Allows You to Pay Your Long Term Care Insurance on a Tax Free Basis

An HSA is a tax-advantaged savings account tied to a high deductible health insurance plan that is increasingly becoming more common with employers.  Contributions to your HSA are made on a pre-tax basis, while withdrawals for qualified medical expenses are made tax free.  Just as importantly, any growth (interest, dividends, capital gains, etc.) inside an HSA is tax free if withdrawals are used for qualified medical expenses.  Tax-qualified long term care insurance premiums are a qualified medical expense. [See IRS Notice 2004-50] The maximum amount of premium you can pay on a tax free basis is indicated in the table below.

Click to Enlarge

 

Certain Withdrawals from Retirement Plans Allow You to Pay Your Long Term Care Insurance on a Tax Free Basis

With the introduction of the Healthcare Enhancement for Local Public Safety Officers (HELPS) Act, qualified retired public safety employees can make tax free distributions of up to $3,000 per year from qualified retirement plans to help pay for long term care insurance.  A qualified public safety employee is an employee of a State or political subdivision of a State if the employee provides police protection, firefighting services, or emergency medical services for any area within the jurisdiction of such State or political subdivision.

An eligible retirement plan includes a governmental qualified retirement or annuity plan, 403(b) annuity, or 457(b) plan. The tax free exclusion applies with respect to eligible retired public safety officers who make an election to have qualified health insurance premiums (including long term care insurance) deducted from amounts distributed from an eligible retirement plan and paid directly to the insurer.

Action Step – Pay for Your Long Term Care Insurance Policies on a Tax Free Basis

Instead of the government taking advantage of you, take advantage of the government.  Follow the guidelines above and force the government to effectively pay up to 37% of your long term care insurance policy.

Aaron Skloff, Accredited Investment Fiduciary (AIF), Chartered Financial Analyst (CFA) charter holder, Master of Business Administration (MBA), is the Chief Executive Officer of Skloff Financial Group, a Registered Investment Advisory firm. The firm specializes in financial planning and investment management services for high net worth individuals and benefits for small to middle sized companies. He can be contacted at www.skloff.com or 908-464-3060.

Click Here for Your Long Term Care Insurance Quotes

freeltcquotes

Tags: 403(b), Asset Protection, Estate Planning, Financial Planning, Health Savings Account, Healthcare Enhancement for Local Public Safety Officers Act, HELPS Act, HSA, Long Term Care Insurance, Medicaid, Medicare, pre-tax, Roth 457(b), Tax Free
https://skloff.com/wp-content/uploads/2016/12/Income-Taxes-28331450.jpg 820 1251 f2819644 https://skloff.com/wp-content/uploads/2013/09/sfg-1.png f28196442020-02-15 12:00:502020-06-25 07:42:24Long Term Care Insurance Tax Free with Health Savings Account (HSA) – Long Term Care University – 02/15/20
You might also like
A Strategy for Married Couples to Maximize Benefit – Morningstar – 07/10/19
Retirement Plan Limits 2018 and 2019
Retirement Plan Contribution Limits for 2016 and 2015 – 01/08/16
Will Long-Term Care Costs Threaten Retirement? – Fox 4 – 11/09/15
Year-end Retirement Tax Guide – CNBC – 12/22/16
Retirement Plan Contribution Limits for 2015 and 2014 – 01/08/15
Couple’s Guide to Social Security – CNBC – 06/04/17
The Texas Long-Term Care Insurance Partnership Program – Long Term Care University – 11/15/18

ARTICLES CATEGORIES

  • 401(k)
  • College Planning
  • Estate Planning
  • Financial Planning
  • Investing
  • IRA
  • Life Insurance
  • Long Term Care Insurance
  • Retirement Planning
  • Social Security
  • Taxes

SLIDES CATEGORIES

  • 401(k)
  • College Planning
  • Estate Planning
  • Financial Planning
  • Investing
  • IRA
  • Life Insurance
  • Long Term Care Insurance
  • Retirement Planning
  • Social Security
  • Taxes

VIDEOS CATEGORIES

  • 401(k)
  • College Planning
  • Estate Planning
  • Financial Planning
  • Insurance
  • Investing
  • IRA
  • Life Insurance
  • Long Term Care Insurance
  • Retirement Planning
  • Social Security
  • Taxes
(c) Copyright 2021
Skloff Financial Group
7682 Santa Margherita Way
Naples, FL 34109
908-464-3060
Privacy Policy
How to Adopt Smart Retirement and Tax Strategies – Yahoo Finance –... In Human Terms, Episode 10: Political Advertising – 02/18/20
Scroll to top