eligible for an income tax deduction. The amount of the deduction depends on the age of the covered person. Benefits paid from a long-term care contract are generally excluded from income. Some states also have deductions or credits and proceeds are always tax-free. Business deductions of premiums are determined by the type of business. Generally corporations paying premiums for an employee are 100% deductible if not included in employee's taxable income. In the United States, Medicaid will provide long-term care services for the poor or those who spend-down assets because of care and exhaust their assets. In most states, you must spend down to $2000. If there is a living spouse/partner they may keep an additional amount. A welfare program, Medicaid does provide medically necessary services for people with limited resources who "need nursing home care but can stay at home with special community care services." However, Medicaid generally does not cover long-term care provided in a home setting or for assisted living. People who need long-term care often prefer care in the home or in a private room in an assisted living facility. Types of policies Private long-term care (LTC) insurance is growing in popularity in the United States. Premiums, however, have risen dramatically in recent years even for existing policyholders. Coverage costs can be expensive, when consumers wait until retirement age to purchase LTC coverage. As they relate to U.S. policies, two types of long-term care policies offered are: Traditional policies are the most common policies offered. Traditional policy premiums, like automobile insurance premiums, are paid on a continual basis. If unused, no premiums are returned. However, if the policy has a "return of premium" rider, a death benefit will be paid to a beneficiary if the insured dies at a time when benefits received under the policy are less than the premiums paid to the insurer. The amount of the benefit is equal to the excess of premiums paid over benefits received. Combination or hybrid policies are a combination of life insurance or an annuity with long-term care insurance. Several varieties of these combinations exist. As they relate to U.S. income tax, two types of long-term care policies offered are: Tax qualified (TQ) policies are the most common policies offered. A TQ policy requires that a person 1) be expected to require care for at least 90 days, and be unable to perform 2 or more activities