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Long Term Care Insurance: Tax

"Qualified" Long Term Care Insurance Contract Defined

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For a long term care insurance policy to be considered a "Qualified" Long Term Care Insurance Contract for IRS purposes, all of the following must be present:

  • The contract must only provide coverage for qualified long term care services. For IRS purposes, long term care services are necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative services and maintenance and personal care services, which are required by a chronically ill individual and provided pursuant to a plan of care prescribed by a licensed health care practitioner.
  • A "chronically ill individual" for these purposes is a person who has been certified by a licensed health care practitioner (such as a doctor) within the previous 12 months as one of the following:
    • An individual who, for at least 90 days, is expected to be (or is) unable to perform at least two so-called "Activities of Daily Living" without substantial assistance due to loss of functional capacity. Activities of daily living are eating, toileting, transferring, bathing, dressing, and continence.
    • If the condition which causes the need for care is mental (cognitive), the individual must require substantial supervision to be protected from threats to health and safety due to severe cognitive impairment.

Reviewed by:
David Flecker, CLU, ChFC
Executive Vice President
DeWitt Stern Group, Inc.
New York, NY

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