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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.
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.
3.
In order for a long-term care policy to be tax-qualified, it may not have the following benefit trigger:
Medical necessity. LTC policies that are not tax-qualified very often include "medical necessity" on the list of benefit triggers.
4.
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.
5.
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.
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.