The Health Insurance Portability & Accountability Act (HIPAA) of 1996 (also known as the Kennedy-Kassebaum Bill), successfully addressed three items that affect long-term care insurance.
These included the following:
- Tightening up Medicaid eligibility requirements
- Establishing federal standards for long-term care insurance
- Offering tax incentives for people paying for care, or buying LTC insurance.
Long-term care insurance policies that were purchased before January 1, 1997 (when HIPAA was implemented) were grand fathered in and are considered tax-qualified (TQ) for federal purposes. They will remain tax-qualified if there are no material changes made to them.
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Important Note: The information in this section is only intended as a general overview and is not intended to provide tax advice. There may have been changes in the tax law that may affect the information in this section. Please consult a tax-advisor for specific tax advice.