Long-Term Care Insurance Promotion Act of 1988

Long-Term Care Insurance Promotion Act of 1988 - Amends the Internal Revenue Code to treat qualified long-term health care insurance contracts as health insurance contracts and their benefits as benefits for personal injuries or sickness for all tax purposes. Applies this provision to policies whose coverage is limited to the necessary diagnostic, preventive, therapeutic, rehabilitative, and personal care services provided to a chronically ill individual in a qualified health care facility or at home.

Allows an income tax deduction of long-term care expenditures.

States that benefits provided under certain employer funded long-term health care insurance shall not be treated as deferred compensation plans for purposes of the tax deduction available for employer contributions to benefit plans.

Permits a taxpayer a refundable 20 percent income tax credit for long-term care insurance expenditures. Reduces the credit percentage as income increases above $25,000 ($40,000 joint). Permits a maximum credit of between $200 and $2,000, based upon the age of the affected individual and indexed annually to reflect the medical care component of the Consumer Price Index.

Allows early distributions from a qualified retirement plan, without penalty, to an individual aged 50 or older who uses the funds to purchase long-term care insurance within 60 days of the distribution.

Considers as nontaxable any exchange by an individual aged 50 or older of a life insurance or annuity contract for a long-term care insurance contract.