Using Pre-Tax Dollars to Pay for Long-Term Care

A funded HSA could cover nearly half of a client’s LTC premium — without ever touching after-tax income.

Most clients think of their HSA strictly as a way to pay for doctor visits, prescriptions, or dental work. Few realize it can also help fund long-term care coverage. According to Securian Financial, its SecureCare product line is structured specifically to make that possible — and for the right client, it can turn an underused account into a meaningful funding source for LTC protection.

Why This Works

Securian’s SecureCare product line uses a premium structure that separates the long-term care portion of the premium from the base life insurance portion, rather than bundling it in as a single charge. Because the LTC portion is structured this way, it can be considered a qualified medical expense — which means clients may be able to use HSA funds to pay for a portion of their SecureCare premium.

Who Makes a Strong Candidate

A few client profiles stand out for this strategy:

• Older prospects, since the IRS age-based deduction limits increase with age — meaning older clients can apply more of their HSA toward the LTC portion of their premium.

• Clients still working and contributing to an HSA, since an actively funded HSA is central to making this strategy work.

A Real-World Example: Howard, Age 60

Securian’s case study illustrates how this plays out for a hypothetical client, Howard, age 60, with $60,000 in his HSA. Howard purchases a $100,000 SecureCare IV policy with a $10,000 annual premium for 10 years, including a couples discount, 6-year benefit duration, 3% compound inflation, an LTC Boost ROP option, and a premium waiver.

Of Howard’s $10,000 annual premium, $5,506 goes toward the base life insurance (non-deductible), and $4,494 goes toward the three tax-qualified LTC agreements (deductible). Because that LTC portion qualifies as a medical expense, Howard can pay for it using HSA funds — up to whichever is less: the LTC portion of the premium, or the IRS’s age-based limit for that year.

The IRS Limits That Make This Possible

The IRS sets annual, age-based limits on how much of a long-term care premium can be treated as a deductible medical expense under IRC Section 213(d)(1)(D):

For Howard, that means at age 60 he can apply $1,860 of HSA funds toward his premium. Once he turns 61, that figure jumps to $4,494 (the full LTC portion of his premium, since it falls below that year’s age-based limit) — and stays there through age 69 in this example.

The Bottom Line for Howard

Over the life of his premium payments shown in this example, Howard would pay $42,306 from his HSA and $57,694 out-of-pocket — meaning roughly 42% of his total SecureCare premium would be paid with pre-tax dollars.

This is a hypothetical example for illustrative purposes only, and actual figures will vary by client age, HSA balance, and policy design.

For the full case study, including additional disclosures and details on SecureCare’s guarantee structure, see Securian’s complete piece here: Using Pre-Tax Dollars to Pay for Long-Term Care — Securian Financial

Worth Raising With Clients

If you have clients who are actively contributing to a well-funded HSA and haven’t yet addressed long-term care, this is a natural way to reframe the conversation — not as a new expense, but as a better use of money they’re already setting aside. It’s especially worth raising with clients in their 60s and 70s, where the age-based IRS limits allow for the largest pre-tax contribution toward the LTC portion of a policy.

Agents interested in customizing a proposal using this strategy for a specific client, or who want help walking through the numbers, can reach out directly to David Seiger.