Question

Jan pays for her qualified long term care policy via a health savings account. What amount of her premium payment would be taxable as ordinary income upon withdrawal?

A)0%
B)The amount in excess of 2% of adjusted gross income
C)50%
D)100%

Answer 1

Premium payments for a qualified long-term care policy made from an HSA are not taxable upon withdrawal if they are for qualified medical expenses, resulting in 0% of the payment being taxable as ordinary income. Therefore, the correct option is A.

Step-by-step explanation:

If Jan pays for her qualified long-term care policy premiums using a health savings account (HSA), the premium payment would not be taxable upon withdrawal, provided the withdrawals are for qualified medical expenses. HSAs offer the benefit of tax-free withdrawals for such expenses. Therefore, the answer to the question about what amount of her premium payment would be taxable as ordinary income upon withdrawal is A) 0%.