Insurers offer long term care policies which provide binding coverage for residential care (under which a daily benefit is provided in the event of a prolonged stay in a long-term care facility that is in a fixed amount, irrespective of the actual costs paid to the facility) and optional coverage (under which the cost of medically necessary health care recommended by a doctor and provided by a nurse is reimbursed). Are the premiums deductible under s. 118.2(2)(q)? CRA responded:
IT-339R2 [para. 4) … states that coverage under a plan must be in respect of hospital care or expense or medical care or expense which normally would otherwise have qualified as a medical expense under the provisions of subsection 118.2(2) … . Secondly, the premium paid by a taxpayer pursuant to a private health insurance plan must have been paid in respect of the taxpayer or a person related to the taxpayer and living in the taxpayer's home.
Consequently, we are of the view that a premium paid by an individual for a long-term care policy of the "Optional coverage: Home care" type may qualify as a medical expense if all the conditions of paragraph 118.2(2)(q) are satisfied. That qualification is a question of fact.
However ... premiums paid by an individual for a long-term care policy under a "Binding coverage: Residential care" would not be considered premiums paid under a private health services plan and would not qualify as medical expenses giving rise to a non-refundable tax credit.
Finally … where the policy includes both coverages, it is our view that the policy would not be a private health services plan and therefore the premiums would not qualify as medical expenses giving rise to a non-refundable tax credit.