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1.
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.
2.
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.
3.
Insurers are required to report to the IRS long-term care benefits paid on _______.
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.
4.
Premiums paid for qualified long-term care policies are tax-deductible _______.
Under some circumstances. Tax deductibility is limited by factors such as your total medical expenses.
5.
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.