Question

Which of the following statements is correct concerning taxation of long-term care insurance?

A) Premiums are always deductible for the insured individual
B) Benefits are always taxable income for the insured individual
C) Premiums are deductible only for employer-sponsored plans
D) Benefits are generally received tax-free by the insured individual

Answer 1

Long-term care insurance benefits are generally received tax-free by the insured individual.

Step-by-step explanation:

The correct statement concerning taxation of long-term care insurance is

option D) Benefits are generally received tax-free by the insured individual.

Long-term care insurance benefits are generally received tax-free by the insured individual.

This means that when an individual receives benefits from their long-term care insurance policy, those benefits are not considered taxable income. However, it's important to note that this applies to individual policies, not employer-sponsored plans.