It is timely that I include information on the tax deductibility of your LTC Insurance premium. Your policy is tax qualified and is treated like medical expenses under the IRS tax code (IRS Code # 213(d)(10)). There are three categories that have different tax treatment.

1. Individual.

2. Self-Employed, Partnerships, S-Corporations, LLCs, and LLPs.

3. C-Corporations.

4. Individual

Individuals may include their premium as part of medical expenses to the extent that they exceed 7.5% of their adjusted gross income. The amount of eligible LTC Insurance premium that can be added to your other eligible expenses are shown below and is based on your age:

Attained Age 2007 Amount of Premium Deductible 2008 Amount of Premium Deductible

40 and less $290 $310

41 to 50 $550 $580

51 to 60 $1110 $1,150

61 to 70 $2,950 $3,080

71 and over $3,680 $3,850

2. Self-Employed, Partnerships, S-Corporations, LLCs, and LLPs

Self-employed individuals, who include sole proprietors, partners, and more than 2% shareholders of a subchapter S-Corporation, can deduct LTC insurance premiums as a business expense. This group does not have to meet the medical expense criteria. However, the amount that can be deducted is subject to the age-based limits as noted above for individual taxpayers. The premium for the spouse of the self-employed individual can be included in the deduction even if the spouse is not an employee or officer of the company. Policies provided for non-owner employees are not taxable to the employee.

3. C-Corporations

C-Corporations can deduct 100% of all Tax Qualified LTC Insurance premiums as a business expense for all employees, their spouses and dependents, and retirees. In addition, an employer's contributions toward the cost of premium are not included in the employee's income.

HSA (Health Savings Account)

The HSA is savings account set up exclusively for paying qualified medical expenses. The HSA must be set-up in conjunction with a high deductible health plan and amounts contributed to the HSA are excludable from income. Self-employed individuals often establish and HSA since they can use pre-taxed dollars to pay for their medical insurance, as well as their LTC Insurance premiums.

(Note: The above information is for general informational purpose only. Please consult your tax consultant for details.)