Historical data for the per diem limits for periodic payments received under a qualified Long Term Care (LTC) insurance contract set by the IRS. Most hybrid plans, either life insurance with long term care or chronic illness benefits, employ per diem limit as a determining factor in their monthly benefit. These annual per diem changes reflect how long term care costs have escalated over the years and reinforce the need to structure an adequate benefit to keep pace with rising long term care costs.
IRS Long Term Care Insurance Per Diem Limit: 2010 to Present
$290 in 2010
$300 in 2011
$310 in 2012
$320 in 2013
$330 in 2014
$330 in 2015
$340 in 2016
$360 in 2017
$360 in 2018
$370 in 2019
$380 in 2020
$400 in 2021
$390 in 2022
$420 in 2023
$410 in 2024 $12,470 per month
Per-diem limitation under Section 7702B of the Internal Revenue Code (IRC) for periodic payments received under a qualified long term care insurance contract
Even though hybrid life insurance with chronic illness riders have a tax qualification status of IRC 101(g), not as comprehensive as IRC 7702B, the per diem limitation is often employed. Life Insurance with a specifically named “Long Term Care” rider is tax qualified under IRC 7702B. How the IRS maximum per diem benefit is used depends on the LTC rider.
Here are examples of a chronic illness rider and a long term care (LTC) rider:
American General “Accelerated Access Solution: (AAS) rider chronic illness benefit
Monthly Benefit Payout Amount:
2% accelerated benefit amount or IRS per diem at time of claim
4% accelerated benefit amount or IRS per diem at time of claim
100% specified amount or Monthly IRS Maximum Benefit at time of claim
in 2024 $12,470 ($410 times 365 divided by 12)
Nationwide “Long Term Care Rider II”
2% face amount at issue
3% face amount at issue
4% face amount at issue
Maximum Monthly Benefit at issue is the lesser of the following two amounts:
(a) Elected Percentage times face amount
(b) HIPAA (IRS) Per Diem times two:
in 2024 $24,600 ($410 times 2 times 30)
The IRS maximum benefit for hybrid Life/LTC plans, if properly designed, will allow expansive benefits to keep pace with inflation to adequately protect the insured decades into the future.
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Sean Drummey
phone: (910) 328-0447
email: spdrummey@gmail.com