Tax qualification
All Partnership-qualified policies are tax-qualified. This means you may be able to deduct part of the premium from your taxes as a medical expense.
In addition, the benefits you receive from a Partnership-qualified long-term care policy are generally not taxable as income.
You may benefit from a tax-qualified Partnership policy.
Review the table below to see if a tax-qualified Partnership policy could be right for you. For more information on the tax implications of purchasing a Texas Long-Term Care Partnership-qualified policy, consult with a tax advisor.
| Tax-Qualified Policies | Non-Tax-Qualified Policies | |
|---|---|---|
| Tax Deductions | You can deduct premiums with other annual medical expenses. | You may not deduct any part of your annual premiums. |
| Counting Benefits as Income | Benefits that you receive and use to pay for long-term care services generally will not be counted as income. For policies that pay benefits using the expense incurred method, benefits that you receive in excess of the costs of long-term care services may be taxable. For policies that pay benefits using the indemnity or disability methods, all benefit payments up to the federally approved daily rate are tax free even if they exceed your expenses. | Benefits that you receive may or may not count as income. |
| Triggering Benefits | Federal law requires that you be unable to perform two ADLs without substantial assistance for at least 90 days before benefits are triggered. “Medical necessity” can’t be used as a trigger for benefits. | Policies can offer a different combination of benefit triggers. Benefit triggers are not restricted to two ADLs. Medical necessity” or other measures of disability can be offered as benefit triggers. |
| Cognitive impairment coverage | A person must require “substantial supervision” for cognitive impairment to be covered. | Policies don’t have to require “substantial supervision” to trigger benefits for cognitive impairments. |
| Plan of care requirement | Plan of care from a health care practitioner required for payment of benefits. | Not required for payment of benefits, but company may ask for it. |
