What Is Form 1099-LTC: Long-Term Care and Accelerated Death Benefits?
The forms in the Internal Revenue Service's (IRS's) 1099 series help taxpayers report monies received from a variety of less-familiar sources. Form 1099-LTC, "Long-Term Care and Accelerated Death Benefits," is the IRS form that enables individual taxpayers to report long-term care (LTC) benefits, including accelerated death benefits. These forms are typically issued in January for the previous year.
- Providers of Form 1099-LTC are typically insurance companies or governmental units, among others.
- Payments reported include those made directly to you, to the insured, or to third parties.
- Your 1099-LTC may list a large amount in benefits for which you may not necessarily owe taxes.
Who Must File Form 1099-LTC: Long-Term Care and Accelerated Death Benefits?
You should receive a 1099-LTC if during the previous year you received—or had received in your name—LTC benefits, including accelerated death benefits. Insurers and other companies offer LTC insurance, policies that pay medical and personal care expenses for people who become chronically ill and are unable to care for themselves. Accelerated death benefits are paid if the insured has been certified either by a physician as terminally ill or by a licensed healthcare practitioner as chronically ill.
Payers are typically insurance companies, governmental agencies, and viatical settlement providers. Such providers regularly engage in purchasing or taking assignments of insurance contracts on the lives of terminally or chronically ill individuals, and they are licensed in the state where the insured lives, if necessary.
Payments include those made directly to you, to the insured, or to third parties. Payers of such benefits must report the amount paid on Form 1099-LTC and send a copy to the recipient of the benefits and to the IRS.
You should receive a 1099-LTC if during the previous year you received long-term care benefits, including accelerated death benefits.
How to Read Form 1099-LTC: Long-Term Care and Accelerated Death Benefits
It helps to understand a few terms before you include your 1099-LTC with your tax return.
- Policyholder—The individual who owns the contract, including the owner of a contract sold or assigned to a viatical settlement provider
- Per Diem Basis—Payments made periodically without regard to actual expenses incurred during the period
- Accelerated Death Benefits—Fully excludable from your income if the insured has been certified by a physician as terminally ill
Accelerated death benefits for individuals certified as chronically ill are generally excludable from income, just as they would be if paid under a qualified LTC insurance contract. Your 1099-LTC may list a large amount of benefits for which you may not necessarily owe taxes (a "tax-qualified policy").
In the case of per diem benefits, the portion of benefits potentially excluded from income is subject to a maximum daily amount. If this limitation is exceeded, part of the benefits may be taxable.
The 1099-LTC will also include all or part of the insured's taxpayer identification number (TIN), Social Security Number (SSN), adoption taxpayer identification number, or employer identification number (EIN). It shows your account number, gross benefits paid under an LTC contract, and gross accelerated death benefits during the year, if these amounts were paid per diem or as reimbursement of actual long-term care expenses. Other information on the form may show if the insured was certified chronically ill or terminally ill and the latest date certified.
Finally, it includes the payer's name and federal tax identification number, tax year for the reported amounts, and the account number. The total number of days paid may also be included.
All copies of Form 1099-LTC are available on the IRS website.
The Bottom Line
Form 1099-LTC is an important part of an individual's tax-filing obligation if you or someone you know received LTC benefits in the previous year. A variety of providers, including insurance companies and governmental entities, should furnish anyone who received such benefits with this form. You may or may not owe taxes on the listed amounts, and you can request further information about the 1099-LTC from the IRS. Taxpayers with questions are best off checking with their providers or working with a tax preparer or expert.