Ltc insurance proceeds

[KWF]

A taxpayer who is doctor certified as chronically ill due to alzheimers desease lives in a nursing home. Taxpayer receives ltc insurance proceeds to pay for nursing home costs, and also receives form 1099-ltc showing the box 1 annual proceeds. The 1099 qualified contract box is not checked. Are the proceeds taxable or excluded from income?

[Koss]

Form 1099-LTC

Proceeds are taxable to the extent that the proceeds exceed the taxpayer's long-term care expenses, after accounting for any other insurance reimbursement

BMK

[Koss]

Reporting

See Form 8853

BMK

[Burke]

The 1099 qualified contract box is not checked.

I believe that issue only comes into play when you are trying to deduct the premiums on Sche A. There is a limit on the amount you can deduct on 8853. For 2012, it is $310 per day. If benefits exceed that amount, there may be taxable income.