Disability & Long-Term CareQuestion 101 of 315
Compared with a non-tax-qualified long-term care policy, a federally tax-qualified LTC policy:
a.Has looser benefit triggers but no tax advantages
b.Provides favorable tax treatment of premiums and benefits but follows the stricter HIPAA benefit-trigger rules
c.Is illegal to sell in California
d.Pays only nursing-home benefits and no home-care benefits
Explanation
A tax-qualified LTC policy follows the federal HIPAA standards, including the 2-of-6-ADL trigger and severe-cognitive-impairment trigger, and in return receives favorable federal tax treatment of premiums and benefits. Non-tax-qualified policies may have more flexible triggers but lose the tax advantages.
Law Reference: HIPAA §7702B; IRC §7702BPractice all 315 questions free — no signup required.
Related questions on this topic
- What inflation protection must a California LTC insurer offer to each applicant for a new individual long-term care policy?
- In California, a long-term care policy may NOT exclude a pre-existing condition for more than how long after the policy's effective date?
- The MAIN consumer benefit of buying a California Partnership for Long-Term Care policy, rather than an ordinary LTC policy, is:
- Which definition of total disability is MOST favorable to the insured during the ENTIRE benefit period?
- Under a California tax-qualified long-term care insurance policy, benefits are triggered when the insured cannot perform without substantial assistance how many of the six Activities of Daily Living (ADLs)?
- Under California's Long-Term Care Insurance Reform Act, what inflation protection must an insurer offer (but not necessarily mandate) to applicants for an individual LTC policy?
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