Do I have to pay taxes when taking out money for long term care, chronic illness, or terminal illness?
Generally, long term care and chronic illness benefits are not taxed as income as long as you stay within the per diem amount. The per diem amount for long term care currently is $370/day or $135,050 per year. Long term care riders that pay out as a reimbursement will be taxed as income for the amount above paid out above the expenses. Critical illness benefits are not taxable at income when paid out during the insured’s lifetime after qualifying for activation of the rider. Terminal illness benefits will not be taxed. However, it may limit your ability to qualify for Medicaid and other public assistance programs.
Ready to get your estimate?
A personalized plan for you.Continue