Nebraska Long-Term Care Savings Plan Contribution

Revised December 31, 2008

A Long-Term Care Savings Plan is a deposit account established by a participant with a participating Nebraska financial institution, to be used for qualified long-term care expenses or to pay long-term care insurance premiums for certain qualified individuals.

A “participant” means any individual who has contributed to a Nebraska long-term care savings plan account at a participating Nebraska financial institution. There is no age restriction to participate in the plan; however, there are restrictions on withdrawals from a qualified long-term care savings plan (see below).

A “participating Nebraska financial institution” is a bank, savings bank, credit union, or other financial institution which has entered into an agreement with the State Treasurer to participate in the Nebraska Long-Term Care Savings Plan. To find an approved participating financial institution near you, please contact the Nebraska State Treasurer’s Office at (402) 471-2455 or see the State Treasurer’s website.

Nebraska law allows a deduction for the amount of annual contributions up to a maximum annual deduction of $1,000 for a single, head-of-household, or married, filing separately return, or $2,000 for a married, filing jointly return when made to a Nebraska Long-Term Care Savings Plan account with a participating Nebraska financial institution.

To claim the deduction, fill in the “Nebraska Long-Term Care Savings Plan Contribution” line on Part B of the Nebraska Schedule I and attach it to your Nebraska Individual Income Tax Return, Form1040N. An adjustment reducing federal adjusted gross income (AGI) for any interest or dividends earned on deposits in a Nebraska Long-Term Care Savings Plan account should also be made on the “Other adjustments decreasing taxable income“ line of the Schedule I.

A qualified individual may make withdrawals, as a participant, from his or her Nebraska Long-Term Care Savings Plan account to pay or reimburse qualified long-term care expenses, or to pay or reimburse long-term care insurance premiums.

A “qualified individual” is a person who:

  • incurred long-term care expenses during the taxable year; or
  • turned 50 years of age or older during the taxable year, and made payments for long-term care insurance premiums during the taxable year.

“Qualified long-term care expense” means the cost of long-term care in a long-term care facility or the cost of care provided in a person’s home when the person receiving the care is unable to perform multiple basic life functions independently. For more details, see the State Treasurer’s website.

“Qualified long-term care insurance premiums” means premiums paid for a long-term care insurance policy that offers coverage to a qualified individual, the individual’s spouse, or another person for whom the qualified individual has an insurable interest.

Any participant who makes a withdrawal for any use other than transfer of account funds to a spouse, payment of long-term care expenses, payment of long-term care insurance premiums, or the death of the participant shall be subject to a ten-percent penalty on the amount withdrawn. In addition, federal AGI as reported on the taxpayer’s Nebraska income tax return must be increased by the amount of such non-qualified withdrawals up to the amount previously deducted on the participant’s Nebraska income tax returns. This amount is reported as an “Adjustment Increasing Federal AGI” on the Nebraska Schedule I.

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