Nelda suffered a serious stroke and was admitted to a nursing home for 140 days.Nursing home charges,including physician fees and other related expenses were $33,000.Under Nelda's long-term care insurance contract,she received reimbursements of $36,000.How much of the $36,000 reimbursement must be included in Nelda's gross income in 2016?

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Quizplus · Accepted Answer

Under the tax code, reimbursements from a long-term care insurance policy for actual medical expenses are generally not included in gross income, provided they do not exceed the actual expenses incurred. Since Nelda's expenses were $33,000 and the reimbursement was $36,000, the excess $3,000 is not taxable because it is within the per diem limit allowed by the IRS. Therefore, none of the reimbursement is included in her gross income.

Nelda Suffered a Serious Stroke and Was Admitted to a Nursing