Protecting your financial future could also help reduce your tax bill.
Here’s what business owners and individuals should know.
Long-term care insurance can help protect your savings from the potentially significant costs of extended care resulting from chronic illness or disability.
But that protection comes at a price. Long-term care insurance premiums can be expensive, especially as you get older.
The good news? The IRS may allow you to deduct some—or even all—of those premiums.
And if you’re a business owner, how your business is structured could make a significant difference in the tax benefits available to you.
Why Consider Long-Term Care Insurance?
Many people assume Medicare will cover the cost of long-term care. Unfortunately, Medicare generally does not pay for ongoing custodial care, such as assistance with bathing, dressing, or other everyday activities.
Medicare may cover certain qualifying short-term skilled nursing care, subject to strict requirements and a maximum of 100 days per benefit period.
Long-term care insurance can help fill that gap, providing financial protection while helping preserve your retirement savings and other assets.
And with the right tax planning, the cost of that protection may be more manageable.
How Much Can You Deduct in 2026?
The amount you can deduct depends on your age, the type of policy you purchase, and whether you pay premiums personally or through your business.
For many taxpayers, the IRS establishes annual age-based limits on the amount of qualified long-term care insurance premiums that may be treated as medical expenses or eligible self-employed health insurance costs.
These limits apply to each insured individual, meaning married couples may be able to combine their eligible amounts.
However, the limits are not automatic deductions. Additional eligibility requirements and deduction rules may apply.
Business Owners: Your Company Structure Matters
One of the most important considerations is how your business is organized.
C Corporations: Potential for a Full Deduction
If your business operates as a C corporation, providing qualified long-term care insurance as an employee benefit may offer significant tax advantages.
When properly structured, the corporation may generally deduct the premiums it pays for eligible employee coverage, while the benefit may be excluded from the employee’s taxable income.
For qualifying owner-employees, this can be a valuable way to provide long-term care protection without being subject to the individual age-based premium deduction limits.
Sole Proprietors and Single-Member LLCs: A Special Opportunity
Sole proprietors and owners of single-member LLCs generally face age-based limits when deducting their own qualified long-term care insurance premiums.
However, a properly established employee-benefit arrangement involving a spouse who is a bona fide employee may create additional opportunities.
Under certain circumstances, the business may be able to deduct qualifying coverage provided to the spouse-employee and eligible family members as an employee benefit.
This arrangement requires careful planning, legitimate employment, appropriate documentation, and proper treatment of the insurance benefits.
S Corporations and Partnerships: Different Rules Apply
Owners of S corporations and partners in partnerships may also qualify for deductions on eligible long-term care insurance premiums.
However, the rules differ from those for C corporations.
Generally, qualifying premiums must be properly paid or reimbursed and reported through the business before eligible owners can claim a self-employed health insurance deduction, subject to applicable age-based limits and other restrictions.
Understanding these differences can help business owners avoid missed deductions or incorrect reporting.
Can You Use Your Health Savings Account?
If you have a Health Savings Account (HSA), you may have another tax-advantaged way to pay for long-term care insurance.
HSA funds can generally be used tax-free to pay eligible qualified long-term care insurance premiums, up to the applicable IRS age-based limits.
This may allow you to use money already set aside for healthcare expenses without creating additional taxable income.
However, the same premiums cannot be used to claim both tax-free HSA treatment and a separate tax deduction.
Not Every Long-Term Care Policy Qualifies
Before purchasing coverage based on potential tax savings, make sure the policy meets IRS requirements.
Qualified long-term care insurance policies must satisfy specific federal standards.
Some hybrid policies that combine life insurance or annuity benefits with long-term care coverage may not qualify for a premium deduction unless the insurer separately identifies an eligible qualified long-term care insurance premium.
It’s important to understand both the coverage you’re purchasing and how the policy will be treated for tax purposes.
Don’t Overlook a Potential Tax-Saving Opportunity
Long-term care insurance is about more than protecting yourself against future healthcare expenses. With the right planning, it may also provide meaningful tax advantages today.
Whether you’re an individual taxpayer, sole proprietor, or owner of a corporation, your age, business structure, and insurance policy can all affect the deductions available to you.
Before you overlook a potential tax-saving opportunity, let’s take a closer look.
IRS Help can review your situation and help determine whether you’re taking full advantage of the tax benefits available under the 2026 rules.
This article is intended for general informational purposes. Tax deductions depend on individual circumstances, policy qualifications, business structure, and applicable IRS requirements.