Form 1099-LTC - Long-Term Care and Accelerated Death Benefits.

2015

Department of the Treasury
Internal Revenue Service

Instructions for Form
1099-LTC
Long-Term Care and Accelerated Death Benefits

Future Developments

For the latest information about developments related to
Form 1099-LTC and its instructions, such as legislation
enacted after they were published, go to www.irs.gov/
form1099ltc.

Reminder

In addition to these specific instructions, you should also use
the 2015 General Instructions for Certain Information
Returns. Those general instructions include information
about the following topics.
Who must file (nominee/middleman).
When and where to file.
Electronic reporting requirement.
Corrected and void returns.
Statements to recipients.
Taxpayer identification numbers.
Backup withholding.
Penalties.
Other general topics.
You can get the general instructions from www.irs.gov/
form1099ltc or by calling 1-800-TAX-FORM
(1-800-829-3676).

However, if a state enacts a licensing requirement
but does not permit viatical settlement providers to
CAUTION
engage in business until the licenses are granted,
the provider will not be considered as licensed under section
101(g)(2)(B)(i)(I). See Rev. Rul. 2002-82, which is on
page 978 of Internal Revenue Bulletin 2002-51 at
www.irs.gov/pub/irs-irbs/irb02-51.pdf.

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Qualified Long-Term Care Insurance Contract

Specific Instructions

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:
1. Any payments made under a product that is
advertised, marketed, or offered as long-term care insurance
(whether qualified or not) and
2. 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.

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:
1. 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
2. Is licensed in the state where the insured lives. If
licensing is not required in the state, the provider must meet
Sep 19, 2014

other requirements (including those below) depending on
whether the insured is terminally or chronically ill.
a. 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.
b. 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.

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, later). 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.

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.

Chronically Ill Individual
A chronically ill individual is someone who has been certified
(at least annually) by a licensed health care practitioner as:
1. 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

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2. Requiring substantial supervision to protect the
individual from threats to health and safety due to severe
cognitive impairment.

Truncating recipient’s identification number on payee
statements. Pursuant to Treasury Regulations section
301.6109-4, all filers of this form may truncate a recipient’s
identification number (social security number (SSN),
individual taxpayer identification number (ITIN), adoption
taxpayer identification number (ATIN), or Employer
identification number (EIN)) on payee statements. Truncation
is not allowed on any documents the filer files with the IRS. A
payer's identification number may not be truncated on any
form. See part J in the 2015 General Instructions for Certain
Information Returns.

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 after the date of certification.

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).

Account Number

The account number is required if you have multiple
accounts for a recipient for whom you are filing more than
one Form 1099-LTC. Additionally, the IRS encourages you to
designate an account number for all Forms 1099-LTC that
you file. See part L in the 2015 General Instructions for
Certain Information Returns.

Box 1. Gross Long-Term Care Benefits Paid

Policyholder

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.

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 (for example, a nursing home,
caretaker, or physician). The policyholder also may be the
insured.

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.

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.

Box 3. Check if Per Diem or Reimbursed
Amount

Insured
The insured is the chronically or terminally ill individual on
whose behalf long-term care benefits are paid.

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.

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...

Policyholder

Copy B

Insured

Copy C

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,
earlier.

Box 5. Check if Chronically Ill or Terminally Ill
(Optional)

Policyholder and the policyholder is Copy B (Copy C is optional)
the insured

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, earlier.

For more information about the requirement to furnish a
statement to the policyholder and to the insured, see part M
in the 2015 General Instructions for Certain Information
Returns.

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Instructions for Form 1099-LTC (2015)