An Item To Note
In addition to these specific instructions, you should also use the
2002 General Instructions for Forms 1099, 1098, 5498, and W-2G.
Those general instructions include information about:
- Backup withholding
- Magnetic media and electronic reporting requirements
- Penalties
- When and where to file
- Taxpayer identification numbers
- Statements to recipients
- Corrected and void returns
- Other general topics
You can get the general instructions from the IRS Web Site at
www.irs.gov or by calling 1-800-TAX-FORM (1-800-829-3676).
Specific Instructions for Form 1099-LTC
File Form 1099-LTC, Long-Term Care and Accelerated Death
Benefits, if you pay any long-term care benefits.
Long-Term Care Benefits
Long-term care benefits means -
- Any payments made under a product that is advertised,
marketed, or offered as long-term care insurance (whether qualified or
not) and
- Accelerated death benefits (excludable in whole or in part
from gross income under section 101(g)) paid under a life insurance
contract or paid by a viatical settlement provider.
Accelerated Death Benefits
An accelerated death benefit is any amount paid under a life
insurance contract for an insured individual who is terminally or
chronically ill. It also includes any amount paid by a viatical
settlement provider for the sale or assignment of a death benefit
under a life insurance contract for a chronically or terminally ill
individual.
Who Must File
File Form 1099-LTC if you paid any long-term care benefits,
including accelerated death benefits. Payers include insurance
companies, governmental units, and viatical settlement providers.
Viatical Settlement Providers
A viatical settlement provider is any person who -
- Is regularly engaged in the trade or business of purchasing
or taking assignments of life insurance contracts on the lives of
terminally or chronically ill individuals and
- Is licensed in the state where the insured lives. If
licensing is not required in the state, the provider must meet other
requirements (including those below) depending on whether the insured
is terminally or chronically ill.
- If the insured is terminally ill, the provider must meet the
requirements of sections 8 and 9 of the Viatical Settlements Model Act
of the National Association of Insurance Commissioners (NAIC),
relating to disclosure and general rules. The provider must also meet
the requirements of the Model Regulations of the NAIC for evaluating
the reasonableness of amounts paid in viatical settlement transactions
with terminally ill individuals.
- If the insured is chronically ill, the provider must meet
requirements similar to those of sections 8 and 9 of the Viatical
Settlements Model Act of the NAIC and must also meet any standards of
the NAIC for evaluating the reasonableness of amounts paid in viatical
settlement transactions with chronically ill individuals.
Qualified Long-Term Care Insurance Contract
A contract issued after 1996 is a qualified long-term care
insurance contract if it meets the requirements of section 7702B,
including the requirement that the insured must be a chronically ill
individual (see Chronically ill Individual below). A
contract issued before 1997 generally is treated as a qualified
long-term care insurance contract if it met state law requirements for
long-term care insurance contracts and it has not been materially
changed.
Chronically ill Individual
A chronically ill individual is someone who has been certified (at
least annually) by a licensed health care practitioner as -
- Being unable to perform, without substantial assistance from
another individual, at least two daily living activities (eating,
toileting, transferring, bathing, dressing, and continence) for at
least 90 days due to a loss of functional capacity; or
- Having a level of disability similar to the level of
disability in 1 above (as prescribed by regulations);
or
- Requiring substantial supervision to protect the individual
from threats to health and safety due to severe cognitive
impairment.
Terminally ill Individual
A terminally ill individual is someone who has been certified by a
physician as having an illness or physical condition that can
reasonably be expected to result in death in 24 months or less.
Reporting
Report payments only if the policyholder is an individual.
Reportable payments are those made to the policyholder, to the
insured, or to a third party.
You may report benefits paid from each contract on a separate Form
1099-LTC. At your option, you may aggregate benefits paid under
multiple contracts on one Form 1099-LTC if the same information is
reportable on the form for each contract (other than the amount of
benefits paid).
Policyholder
The policyholder is the individual who owns the contract, including
the owner of a contract sold or assigned to a viatical settlement
provider. In the case of a group contract, the term policyholder
includes the certificate holder (or similar participant). You must
report long-term care benefits to the policyholder even if the
payments were made to the insured or to a third party (e.g., a nursing
home, caretaker, or physician). The policyholder also may be the
insured.
Enter the name, address, and taxpayer identification number (TIN)
of the policyholder on Form 1099-LTC. If the policyholder is not an
individual, no reporting is required.
Insured
The insured is the chronically or terminally ill individual on
whose behalf long-term care benefits are paid.
Enter the name, address, and TIN of the insured on Form 1099-LTC.
Statement to Policyholder and Insured
If you are required to file Form 1099-LTC, you must furnish a
statement (or acceptable substitute) to both the policyholder and to
the insured as shown.
IF the statement is for the ...
|
THEN use...
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Policyholder
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Copy B
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Insured
|
Copy C
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Policyholder and the policyholder is the insured
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Copy B (Copy C is optional)
|
For more information about the requirement to furnish a statement
to the policyholder and to the insured, see part H in the
General Instructions for Forms 1099, 1098, 5498, and W-2G.
Box 1. Gross Long-Term Care Benefits Paid
Enter the gross long-term care benefits paid this year (other than
accelerated death benefits). These benefits are all amounts paid out
on a per diem (or other periodic) basis or on a reimbursed basis. It
includes amounts paid to the insured, to the policyholder, and to
third parties. You are not required to determine whether any benefits
are taxable or nontaxable.
Box 2. Accelerated Death Benefits Paid
Enter the gross accelerated death benefits paid under a life
insurance contract this year to or on behalf of an insured who has
been certified as terminally or chronically ill. Include the amount
paid by a viatical settlement provider for the sale or assignment of
the insured's death benefit under a life insurance contract.
Box 3. Check if Per Diem or Reimbursed Amount
Check a box to indicate whether the payments were made on a per
diem (or other periodic) basis or on a reimbursed basis. For
accelerated death benefits, do not check a box if you made payments on
behalf of a terminally ill person. Per diem basis means payments made
on any periodic basis without regard to actual expenses. Reimbursed
basis means payments made for actual expenses incurred.
Box 4. Qualified Contract (Optional)
Check the box to indicate whether long-term care insurance benefits
are paid from a qualified long-term care insurance contract. See
Qualified Long-Term Care Insurance Contract on page LTC-1.
Box 5. Check if Chronically ill or Terminally ill (Optional)
Check the box to indicate whether the insured was chronically or
terminally ill. Also, enter the latest date certified. If the insured
was neither chronically nor terminally ill, leave this box blank. See
Chronically ill Individual and Terminally ill
Individual on page LTC-1.
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