Do I Need to Report 1099-LTC on My Tax Return?

If you received Form 1099-LTC, you do need to address it on your tax return, but reporting it is not the same as paying tax on it. In almost every case, the benefits shown on the form are excluded from your income. What the IRS wants is the paperwork proving that: you file Form 8853 with your Form 1040 to document the exclusion, even when the taxable amount works out to zero.¹

Whether any portion becomes taxable depends on two things: whether your policy is a qualified long-term care contract, and whether it pays a fixed daily amount or reimburses actual expenses.

What the Form Is Showing You

Your insurer sends Form 1099-LTC any time it pays long-term care benefits during the year. The form reports what was paid and leaves the tax calculation to you.²

Box 1 shows the gross long-term care benefits paid during the year, whether the money went to you, to a care facility, or to another provider. Box 2 shows accelerated death benefits paid under a life insurance contract because the insured was certified as terminally or chronically ill. Box 3 tells you how the benefits were calculated: “Per diem” means a fixed daily amount regardless of what care actually cost, and “Reimbursed” means the policy paid for expenses you actually incurred.³

Box 4 is the one to check carefully. If it’s marked, your policy is a qualified long-term care insurance contract. The insurer isn’t required to complete this box, so if it’s blank, call your insurance company and confirm the policy’s status before you file. That single answer changes how the rest of the analysis runs.³

When the Benefits Are Tax-Free

Benefits from a qualified contract are treated like payments from an accident and health insurance policy, which means they are generally excluded from gross income.⁴ A qualified contract is one that only covers qualified long-term care services, is guaranteed renewable, has no cash surrender value, and does not reimburse expenses that Medicare would cover.

Within a qualified contract, the payment method decides how much work you actually have to do:

If Box 3 is marked “Reimbursed Amount,” the policy only pays for actual care expenses you incurred. Those reimbursements are excluded from income and the daily cap doesn’t apply. You still file Form 8853, but the calculation is straightforward because benefits can’t exceed your costs by design.⁵
If Box 3 is marked “Per Diem,” the policy pays a fixed daily rate regardless of actual costs. The payments are excluded up to the federal per diem limit, which is $430 per day for 2026. If your daily benefit is at or under that limit, nothing is taxable. If it’s over, you run the math on Form 8853.⁶

For accelerated death benefits in Box 2, the rules follow the same shape. If the insured is terminally ill, the payment is fully excludable.⁷ If the insured is chronically ill, the exclusion is limited to actual qualified care expenses not covered by other insurance, or to the per diem cap, whichever is greater. That means the Form 8853 calculation applies.

A note on non-qualified contracts: if Box 4 is not checked and your insurer confirms the policy is non-qualified, tax treatment is less clean. Benefits may still be partly or fully excludable under general accident and health insurance rules, but the analysis depends on your specific policy terms. This is one to walk through with a tax professional rather than guess at.

Running the Per Diem Calculation on Form 8853

Section C of Form 8853, lines 18 through 26, is where you figure out whether any portion of a per diem benefit is taxable.⁸ The logic:

Take the greater of your actual qualified long-term care expenses for the year, or $430 multiplied by the number of days you received care in 2026.
Subtract any reimbursements you received from other insurance.
Compare that figure to your total benefits in Box 1. If Box 1 is higher, the excess is taxable. If the figure from step 1 is higher, nothing is taxable.¹

Here is why this rarely produces a tax bill. Nursing home and assisted living costs commonly run well above $430 a day. When your actual care expenses exceed the per diem benefits your policy pays, Line 26 lands at zero even if your daily benefit is above the IRS limit. Keep your care invoices and receipts, because those numbers are what let you use the “actual expenses” side of the calculation instead of being capped at $430.

If care started and stopped during the year, run Section C separately for each period and combine the results on the Form 8853 you file.⁹

Where the Numbers Go on Your Return

File Form 8853 with your Form 1040 whether or not any amount is taxable. If the calculation produces a taxable figure on Line 26, that amount gets reported as other income on Schedule 1. If the result is zero, no additional entry is needed on your return beyond attaching the completed Form 8853.

Insurers must send Form 1099-LTC by January 31 following the tax year.¹⁰ Hold onto the form together with your care expense records; the two together are what support the exclusion.

Two Traps Worth Knowing About

Multiple People Own Policies on the Same Insured

The $430 daily exclusion is not per policy. It’s per insured person. If more than one person owns a qualified LTC contract covering the same individual, the daily exclusion has to be shared.⁹

The allocation follows a set priority. The insured claims the exclusion first, up to the payments the insured personally received. If the insured files jointly and the spouse is also a policyholder, they share the exclusion first based on what each received. Anything left is divided among other policyholders in proportion to their payments. If you own a policy on someone else and they own one on themselves, coordinate before filing. Getting this wrong can hand the non-insured policyholder an unexpected tax bill.

Medical Expense Deduction Overlap

If you itemize and claim medical expenses on Schedule A, you cannot deduct expenses that were already reimbursed tax-free through your LTC insurance.¹¹ Say your qualified long-term care costs were $80,000 and your insurer paid $65,000 tax-free. Only the remaining $15,000 belongs in your itemized medical expenses, subject to the usual AGI threshold. This one gets missed regularly when benefit payments are large.

If Your 1099-LTC Is Missing or Wrong

Contact your insurer directly if the form hasn’t arrived by mid-February. If that doesn’t produce a copy by the end of February, call the IRS at 800-829-1040 and they’ll follow up with the payer.¹²

If Box 1 or Box 2 doesn’t match your records, ask the insurer for a corrected form rather than filing with numbers you know are off. If a corrected form doesn’t arrive before your filing deadline, use your own records to estimate the correct amounts, and file Form 1040-X to amend the return if a corrected 1099-LTC turns up later with different figures.

1
Internal Revenue Service. Publication 525, Taxable and Nontaxable Income
2
Internal Revenue Service. Instructions for Form 1099-LTC
3
Internal Revenue Service. Instructions for Form 1099-LTC (Rev. April 2025)
4
Office of the Law Revision Counsel. 26 U.S. Code 7702B – Treatment of Qualified Long-Term Care Insurance
5
Internal Revenue Service. Form 1099-LTC (Rev. April 2025) – Instructions for Policyholder
6
Internal Revenue Service. Rev. Proc. 2025-32
7
Office of the Law Revision Counsel. 26 U.S. Code 101 – Certain Death Benefits
8
Internal Revenue Service. Instructions for Form 8853 (2025)
9
Internal Revenue Service. Instructions for Form 8853 (2025)
10
Internal Revenue Service. Publication 1099, General Instructions for Certain Information Returns (2026)
11
Internal Revenue Service. Publication 502, Medical and Dental Expenses
12
Internal Revenue Service. What to Do When a W-2 or Form 1099 Is Missing or Incorrect