Sharisma 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 $63,000.Under Sharisma's long-term care insurance contract,she received reimbursements of $56,000.How much of the $56,000 reimbursement must be included in Sharisma's gross income in 2016?

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Quizplus · Accepted Answer

The portion of the reimbursement that must be included in Sharisma's gross income is the amount that exceeds her actual nursing home expenses. In this case, her expenses were $63,000 and she received $56,000 in reimbursements. Therefore, she was still out of pocket $7,000 ($63,000 - $56,000). Since long-term care insurance is treated as accident and health insurance for tax purposes, any reimbursements received over and above actual expenses are included in gross income. Thus, the $8,400 ($56,000 - $47,600) difference must be included in Sharisma's gross income in 2016.

Sharisma Suffered a Serious Stroke and Was Admitted to a Nursing