I have a question regarding if Long Term Care (LTC) insurance payments received by a Tax Payer (TP) must be used to offset Schedule-A LTC medical expenses. I posed this question in another tax related group but would also like to get the opinions of the experts in this NG. A CPA I'm dealing with says that the LTC payments are neither reportable as income (per Form 8853) nor required to be used to offset medical expenses. I agree with the "not reportable as income" part but have doubts about the medical expenses offset part. The CPA is saying that the LTC payments of $100/day from the insurance company are like a disability insurance payout She says this because
1) the insurance payments are reported on a 1099-LTC
2) the payout would be $100/day regardless of the actual cost of the LTC. Even if the cost was less than $100/day (not likely) payout would still be the same. The only requirement is the that the insured be in a LTC facility. The CPA further posits that IRS regs do not say anywhere that LTC insurance *payments* (as opposed to
*reimbursements*) must be used to offset LTC expenses. The premiums were paid with "before" tax dollars i.e. the premiums were listed in Sch-A as medical insurance expenses. However, since the policy began paying, payment of premiums was suspended and no longer are required. Does the CPA's position have any merit? It seems very aggressive to me so I would like to get a few more opinions on this. Thanks for any comments.
-- To email me directly, remove CLUTTER.
>
>
>
>
>
>
>
>
>