Julia suffered a severe stroke and has been admitted to a private hospital where she is expected to remain for the rest of her life.She is certified by a licensed health care practitioner as being a "chronically ill individual." Her hospital expenses amount to $350 per day.She will receive $340 per day from a $500,000 life insurance policy as an accelerated death benefit.In 2019,she was in the hospital for 10 days and received $3,400.How much of this amount is taxable?

Question

Quizplus · Accepted Answer

The accelerated death benefits received by a chronically ill individual are generally not taxable, provided they do not exceed the actual cost of care. Julia's daily benefit of $340 is less than her daily hospital expense of $350, so the amount received is not taxable.

Julia Suffered a Severe Stroke and Has Been Admitted to a Private