What Is Form 1099-LTC and How Does It Affect Your Taxes?

mariadrg2021
Sep 12
2 min read

Updated: Sep 14

At MDR Tax Filing, we understand that IRS reports can create confusion and concern. One of the most common forms related to health and personal care is Form 1099-LTC (Long-Term Care Insurance), connected to long-term care insurance policies.

What Is Form 1099-LTC?

Form 1099-LTC reflects benefit payments made under a long-term care insurance policy. These payments may be made:

Directly to you as the insured.
To a third party on your behalf, such as an assisted living facility, nursing home, or home care provider.

Why Does It Cause Concern?

Many people are surprised when they receive this form, as the amount reported to the IRS could be $20,000, $40,000, or even $80,000. It’s natural to think: “Do I owe taxes on all of this money now?”

👉 The truth is that receiving the form does not necessarily mean the amounts are taxable income.In most cases, the reported benefits are offset by deductible expenses related to care.

Who Receives This Form?

Typically, it’s received by:

People whose insurance company pays benefits for care services at home, in an assisted living facility, or nursing home.
People with life insurance policies that pay accelerated benefits due to a terminal illness.

Key Takeaways

Not all amounts reported on Form 1099-LTC are taxable.
Your individual situation must be reviewed, since each case depends on care expenses and policy coverage.
Having a trusted advisor helps you avoid overpaying taxes or filing your return incorrectly.