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Planning Intermediate: Tax Aspects of Long-Term Care Insurance

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1.
Premiums paid for qualified long-term care policies are tax-deductible _______.
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Under some circumstances. Tax deductibility is limited by factors such as your total medical expenses.
2.
The law that provided clear guidance on tax-qualified policies gave virtually no clue about the taxability of long-term care benefits paid on a non-tax-qualified policy.
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True. The same law that provided clear guidance on tax-qualified policies gave virtually no clue about the taxability of long-term care benefits paid from any other kind–i.e., a non-tax-qualified policy.
3.
Taxpayers must report long-term care benefits on IRS Form 8853 only if the policy is _______.
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Either a tax- or non-tax-qualified policy. Policyholder/taxpayers are required to report benefits paid from any type of LTC policy on IRS Form 8853.
4.
In order for a long-term care policy to be tax-qualified, it may not have the following benefit trigger:
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Medical necessity. LTC policies that are not tax-qualified very often include "medical necessity" on the list of benefit triggers.
5.
Insurers are required to report to the IRS long-term care benefits paid on _______.
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Either a tax-qualified or non-tax-qualified policy. Insurance companies are required to advise the IRS of benefits paid to anyone from any type of long-term care insurance policy, tax-qualified or not.