Policies issued after January 1, 1997, which provide tax incentives, are classified as tax-qualified plans. Policies issued before 1997 were "grandfathered" into the law and are considered tax-qualified. Premiums for tax-qualified plans are deductible to the extent that you itemize deductions and have medical expenses in excess of 7.5% of adjusted gross income. Benefits received are non-taxable. Policies issued after January 1, 1997, which do not provide tax incentives, are classified as non-tax-qualified plans. Premiums for these policies are not tax-deductible.
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