Are long-term care insurance benefits taxable?
Enter the daily benefit your policy pays, the days paid this year and the care costs you had. The taxable part of the benefits, if any, appears at once.
Example, not your result yet· change a figure to see yours
Taxable part of the benefits
$25,550
$182,500 paid · $156,950 excluded
| Paid by the policy | $182,500 |
| 2026 limit: $430 a day | $156,950 |
| Excluded from income | $156,950 |
| Reported as income | $25,550 |
Form 8853 compares the benefits with the larger of the daily limit and the actual costs, minus reimbursements. A policy that reimburses actual costs is not taxed this way.
Compiled by Radif Partners · How the figures are built · IRS rules and BLS plan data read November 7, 2026
Benefits from a qualified long-term care insurance contract are generally not income: IRS Publication 525 treats these contracts as accident and health insurance. A policy that reimburses the care costs you incur is tax-free without a limit. A policy that pays a flat amount per day, a per diem or indemnity benefit, is tax-free up to the larger of $430 a day in 2026 ($420 in 2025) and the actual cost of qualified care, minus reimbursements from other sources. Above that, the benefit is taxable income, figured on Form 8853. A policy paying $500 a day all year to someone whose care cost $120,000 produces $25,550 of taxable income, because the $156,950 yearly limit is larger than the costs. With $200,000 of costs, nothing is taxable. The same limit covers accelerated death benefits paid on a per diem basis by a life policy for a chronically ill insured.
Two kinds of benefit, two rules
Long-term care policies pay in one of two ways. A reimbursement policy, sometimes called expense-incurred, pays the bills for qualified care up to a daily or monthly maximum, and the payment can never exceed what the care cost. A per diem or indemnity policy pays a set amount for each day you qualify, whatever you spend. IRS Publication 525 treats qualified long-term care contracts as accident and health insurance, so amounts received from them are excludable as amounts received for personal injury or sickness. For reimbursement benefits, that settles it. For per diem benefits, the exclusion has a limit.
The per diem limit
The excludable amount for a period is the larger of two figures, minus any reimbursement received for the cost of qualified long-term care services during that period: the per diem limit times the number of days, $430 a day for 2026 under section 4.62 of Revenue Procedure 2025-32, or the actual cost of those services. Benefits up to that amount are tax-free; the rest is income. The limit is set by section 7702B(d)(4) and adjusted every year for inflation.
The calculator applies this to a year of benefits. A $500 daily benefit paid for 365 days is $182,500. If care cost $120,000, the limit times the days, $156,950, is the larger figure, and $25,550 is taxable. If care cost $200,000, the costs are the larger figure and the whole benefit is excluded. A policy paying less than $430 a day can never produce taxable income for that insured.
Taxable part of your daily benefits
Example, not your result yet· change a figure to see yours
Taxable part of the benefits
$25,550
| Paid by the policy | $182,500 |
| 2026 limit: $430 a day | $156,950 |
| Excluded from income | $156,950 |
| Reported as income | $25,550 |
Form 1099-LTC and Form 8853
The insurer reports the benefits paid during the year on Form 1099-LTC. The policyholder or the insured files Form 8853 with the return when per diem payments or accelerated death benefits were received, to figure the excludable part. Keep the invoices for care during the year: they are the actual costs that can raise the exclusion above the per diem limit.
Who counts as chronically ill
Benefits are paid for qualified long-term care services to a chronically ill individual, as Publication 525 and Publication 502 define it: someone certified by a licensed health care practitioner within the previous 12 months as unable to perform at least two activities of daily living (eating, toileting, transferring, bathing, dressing and continence) without substantial assistance for at least 90 days, or as needing substantial supervision for protection. These are the contract's benefit triggers; the policy states how certification works.
Hybrid and life policies
A life insurance policy that pays part of its death benefit early because the insured is chronically ill is subject to the same per diem limit when it pays periodically, combined with any long-term care benefits for the same person. The hybrid calculator shows the monthly benefit such a policy pays and the part that may exceed the limit. Premiums on the long-term care side have their own rules on the deduction page.
What makes a contract qualified
Publication 525 lists the conditions: the contract covers only qualified long-term care services; the insurer must keep renewing it; it has no cash surrender value or other money that can be paid, assigned, pledged or borrowed; refunds and dividends, other than at death or full surrender, may only lower future premiums or raise future benefits; and, in most cases, it does not pay for services Medicare would pay for, unless Medicare is the secondary payer or the contract pays per diem benefits regardless of expenses. A policy outside these conditions falls outside the exclusion described here; your policy's declarations page or the insurer says which kind you hold.