Stacking Policy's with One Insurance Company

[Mr_Ed]

originally posted by Mr_Ed




Weren't you ever taught that a question shouldn't be answered by another question?

(Guess not)

You can't answer the question because nowhere in the IRC does it say that the benefits of a reimbursement LTCi policy will be taxed.

This person is getting benefits from two reimbursement policies.
Since both policies are reimbursement he will not be taxed on the benefits.

The only time someone can be taxed on LTCi benefits is if they have an indemnity policy, the indemnity daily benefit is OVER $330 per day AND the cost of care is less than the indemnity daily benefit, in which case he/she will be taxed on the difference between the daily benefit and the cost of care.

For some reason you think this poster's client will be taxed on benefits from one of the policies, even though both policies are reimbursement.

I asked a very simple question and since you're so confident in your answer you should be able to point me to the line in the IRC that answers this question:

Where in the IRC does it say that someone receiving LTCi benefits from a reimbursement policy can be taxed on those benefits?

 

[Arthur Rudnick]

originally posted by Mr_Ed

Where in the IRC does it say that someone receiving LTCi benefits from a reimbursement policy can be taxed on those benefits?

As usual, you like to put words in someone's mouth.
Let me be clear:
I never said that reimbursement benefits are taxed.

What I said was this policyholder has a reimbursement policy. The cost of his care is $150/day. The company is reimbursing him $300/day.

He will be receiving a 1099-LTC from Bankers Life showing he received benefits in excess of the cost of his care. If he is ever audited or questioned by the IRS, any excess payments over the actual cost of care will be considered taxable income.

Very simple to understand. Doesn't take a PhD in Internal Revenue to comprehend.

The IRS treats reimbursement payment differently than Per Diem payments.
(But you don't)

If you'd like to make up your own IRS rules, that's fine.

There's no reason to debate this any further. Why don't you call the IRS and tell them how you'd like them to interpret their rules.

Unlike me, they may very well agree with you and change the law that's been on the books for 18 years.

OK, next topic....................

 

[Mr_Ed]

fyi... if you take a close look at the instructions for form 8853 it states that the form is for those who have received per diem benefits from their LTCi.

Form 8853 does NOT have to be completed for someone who has received benefits from a reimbursement LTCi policy.

That is why form 1099LTC has a box specifying if the benefits were for a reimbursement policy or for a "per diem" (indemnity) policy.

If some receives a form 1099LTC and the box is marked "reimbursement" policy then they do NOT have to complete form 8853.

Form 8853 only has to be completed by those who have received their LTCi benefits on a "per diem" (indemnity) basis.

You are correct that these rules have been the same since 1997. I'm sorry if the person who trained you in 1997 did not explain it correctly.

----------

originally posted by Mr_Ed



As usual, you like to put words in someone's mouth.
Let me be clear:
I never said that reimbursement benefits are taxed.

What I said was this policyholder has a reimbursement policy. The cost of his care is $150/day. The company is reimbursing him $300/day.

He will be receiving a 1099-LTC from Bankers Life showing he received benefits in excess of the cost of his care. If he is ever audited or questioned by the IRS, any excess payments over the actual cost of care will be considered taxable income.

Very simple to understand. Doesn't take a PhD in Internal Revenue to comprehend.

The IRS treats reimbursement payment differently than Per Diem payments.
(But you don't)

If you'd like to make up your own IRS rules, that's fine.

There's no reason to debate this any further. Why don't you call the IRS and tell them how you'd like them to interpret their rules.

Unlike me, they may very well agree with you and change the law that's been on the books for 18 years.

OK, next topic....................

I didn't see this reply while I was typing my last comment.

You are correct when you say:

"The IRS treats reimbursement payment differently than Per Diem payments."


If form 1099LTC is marked "reimbursement" and the policy is a "tax qualified" policy, then the benefits are tax free.

If someone's form 1099LTC is marked "reimbursement" and the policy is a "tax qualified" policy, then they do not even have to complete form 8853.

Form 8853 only needs to be completed for people who have "per diem" LTCi policies.

Yes, this guy is double-dipping. The company is paying him $140 more per day in benefits than he deserves.

But when the 1099LTC's are sent to him both of his 1099LTC's will be marked "tax qualified" and "reimbursement". Therefore, he won't be taxed on them and the IRS won't even audit him for it.

According to IRS regs, his 1099LTC's mean all his benefits are tax-free.

 

[ltcadviser]

Football starts tonight, more importantly. Here we go Steelers, here we go

 

[Arthur Rudnick]

originally posted by ltcadviser

Football starts tonight, more importantly. Here we go Steelers, here we go

And, how'd that work out?

 

[ltcadviser]

originally posted by ltcadviser



And, how'd that work out?

Perfectly. Had 10 of my survivor pool picks on the Patriots. Whoot.

 

[Mr_Ed]

The accountants agree with me:

https://accountants-community.intui...3-p-2-ltc-when-both-spouses-received-benefits