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1.
Taxpayers must report long-term care benefits on IRS Form 8853 only if the policy is _______.
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.
2.
For tax purposes, long-term care insurance premium expenses are considered _______.
All of the above. For most taxpayers, LTC premiums are considered a medical expense for income tax purposes, subject to 10 percent AGI itemized deduction limits.
3.
A long-term care policy must pay benefits only to the provider to qualify for tax benefits.
False. The law makes clear that benefits from a tax-qualified policy are tax-free if used to pay or reimburse you for long-term care expenses that are not covered in some other way.
4.
Most long-term care policies sold prior to January 1, 1997 are eligible for the same favorable treatment because they were "grandfathered" by the law.
True. Most policies sold prior to January 1, 1997 are eligible for the same favorable treatment irrespective of HIPAA requirements because they were "grandfathered" by the law.
5.
Long-term care insurance policies received favorable tax treatment as a result of _______.
HIPAA 1996. In 1996, the Health Insurance Portability and Accountability Act (HIPAA) provided that premiums for policies meeting its pro-consumer requirements could be partially deducted by some taxpayers, and benefits are paid income tax-free.