Home Stretch Review

Question 1

Qualified Long-Term Care Insurance (LTCi)
Required features

Answer 1

Benefits payable only for qualified long-term care services.
Contract must be guaranteed renewable.
Contract does not pay or reimburse expenses reimbursable under Medicare.
Contract does not provide for a cash surrender value.
Policy dividends must be applied as a reduction in future premiums or increase future benefits
Limitations and exclusions are prohibited (except pre-existing within 6 months of application).
Contract cannot provide for skilled nursing care only or require prior hospitalization.
Contract must have 2-year incontestable clause for misrepresentation.

Question 2

Qualified Long-Term Care Insurance (LTCi) Tax benefits:

Answer 2

Benefits are received tax-free.
Premiums paid are a qualified medical expense for the itemized deduction for medical expenses.
Premiums can be paid from a health savings account (HSA).
Premiums paid by employers are tax-free to employees and benefits remain tax-free.

Question 3

Qualified Long-Term Care Insurance (LTCi) Benefits triggers:

Answer 3

2 of 6 ADLs
Substantial cognitive impairment

Question 4

AMT Formula

Answer 4

Regular taxable income

Add: tax preference items

Add: standard deduction (if TP does not itemize)

Add/Subtract: AMT adjustments and tax preference items

AMTI (Alternative Minimum Taxable Income)

Less: Exemption Amount (phased out at higher incomes)

AMT base

Times: AMT tax rate(s)

Gross AMT tax

Less: AMT foreign tax credit

Tentative minimum tax (TMT)

Less: Regular tax liability

AMT* (If tentative minimum tax exceeds the regular tax, the difference is the AMT)