Long Term Care Certification Practice Test

Which of the following is NOT a provision of a tax-qualified long-term care policy?

1. The taxpayer must be of a certain age

2. The taxpayer must be self-employed

3. The policy must provide coverage for a minimum period

4. The policy benefits must be defined clearly

The correct answer is: The taxpayer must be self-employed

A tax-qualified long-term care policy is designed to provide benefits that can qualify for favorable tax treatment under the Internal Revenue Code. One key provision of such policies is that they do not require the policyholder to be self-employed. In fact, any individual can purchase a tax-qualified policy, thus making it accessible to a larger segment of the population, including employees and retirees. The other provisions are aimed at ensuring that the policy meets specific standards to qualify for tax deductions. For instance, there are age requirements linked to the deductibility of premiums, minimum coverage periods that ensure the policy is designed to provide long-term benefits, and clear definitions of benefits so that policyholders understand what is covered and can utilize the policy effectively when needed. Each of these provisions helps maintain the integrity of tax-qualified plans and ensures they provide meaningful assistance for long-term care needs.