Page 95 - Wages, Salaries and Other Earnings

Long-term care insurance contracts

 Long-term care insurance contracts in most cases are treated as
accident and health insurance contracts. Amounts you receive
from them (other than policyholder dividends or premium
refunds) in most cases are excludable from income as amounts
received for personal injury or sickness.
 To claim an exclusion for payments made on a per diem or other
periodic basis under a long-term care insurance contract, you must
file Form 8853 with your return.

 A long-term care insurance contract is an insurance contract that
only provides coverage for qualified long-term care services.
 The contract must:
• Be guaranteed renewable;
• Not provide for a cash surrender value or other money that
can be paid, assigned, pledged, or borrowed;
• Provide that refunds, other than refunds on the death of the
insured or complete surrender or cancellation of the contract,
and dividends under the contract, may only be used to reduce

future premiums or increase future benefits; and
• In most cases, not pay or reimburse expenses incurred for
services or items that would be reimbursed under Medicare,
except where Medicare is a secondary payer or the contract
makes per diem or other periodic payments without regard to
expenses.

93