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) 100% D) 50%
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HSA funds can be used tax-free for qualified medical expenses, including qualified long-term care insurance premiums, subject to certain limits. Show more…
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Six years ago, Gene deposited $250,000 into a nonqualified annuity, and over time the contract has grown to $315,000. This year, Gene, now age 55, would like to withdraw $50,000 to help his daughter with her student loan debt. Which one of the following is representative of the tax implications of such a distribution? A) The distribution would be fully taxable and subject to a 10% early withdrawal penalty. B) The distribution would not be subject to income tax but would be subject to the 10% early withdrawal penalty. C) The distribution would be subject to taxation according to the applicable exclusion ratio. D) The distribution would be fully taxable, but the 10% early withdrawal penalty would not apply.
Akash M.
14. Abby is a passenger in an automobile that is struck by a drunk driver. She suffers severe trauma to the head, which results in a substantially reduced ability to render safe judgments. Though Abby is able to go about her activities of daily living, her condition is permanent, and she must be supervised much of the time. Should this set of conditions normally qualify for benefits under a qualified long-term care policy? a. Yes, because it is a loss of cognitive function. b. No, because she can carry out her ADLs unassisted, and ADL impairment is required under an LTC policy. c. Yes, because this would loosely fall into the category of "medically necessary care." d. No, because this type of condition is covered by disability insurance. 15. Franklin owns a qualified LTC partnership policy that will provide for $250,000 in lifetime benefits. With this policy, which of the following are specifically protected from Medicaid's spend-down rules that would otherwise not be protected? a. his $175,000 home b. his $200,000 investment portfolio c. his annual $5,000 in dividend income d. his $1,000 in monthly Social Security retirement income benefits 16. This year, Ruben purchased a partnership-qualified LTC insurance policy with maximum lifetime benefits of $200,000. His countable assets total $300,000. Under his state's Medicaid program, he would be permitted to keep up to $2,000 in countable assets if he were to qualify for Medicaid. Ruben has a stroke, lapses into a coma, and requires long-term care services. The cost of his care exceeds the policy's maximum benefit amount, and he must apply to Medicaid. What is the total amount of Ruben's personal countable assets that would be exempt from Medicaid's spend-down requirement? a. $2,000 b. $200,000 c. $202,000 d. $300,000 17. All of the following insureds purchased a long-term care insurance policy after 2000. Based solely on the information given, who does not own a tax-qualified LTCi policy? a. Barry's LTCi policy offers no nonforfeiture benefit b. Ashley's LTCi policy began to pay after 90 days of incontinence and the inability to eat unaided. c. Emily's policy began to pay after 90 days of being unable to bathe or dress unaided.
Madhur L.
The principle of indemnity will reimburse the insured only up to the actual amount of the loss. Which insurance product is an exception to that rule? A) Disability and health insurance B) Standard long-term care C) Indexed universal life insurance D) Deferred variable annuity
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