Long Term Care Certification Practice Test

Which program provides federal tax relief on premiums and benefits from long-term care policies?

1. Medicare

2. HIPAA

3. Medicaid

4. Social Security

The correct answer is: HIPAA

The correct answer is based on the provisions set forth by the Health Insurance Portability and Accountability Act (HIPAA), which provides federal tax relief related to long-term care insurance. Under HIPAA, qualified long-term care insurance policies can receive favorable tax treatment, allowing individuals to deduct premiums as medical expenses, subject to certain limitations based on age. Additionally, benefits received from these policies can be tax-free as long as they are used for qualifying long-term care expenses. Other programs do not specifically provide tax relief on long-term care premiums and benefits. Medicare focuses mainly on providing health coverage for individuals aged 65 and older or those with disabilities, but does not offer the specific tax advantages related to long-term care insurance. Medicaid offers financial assistance for long-term care services but is typically a means-tested program, not a source of tax relief for insurance premiums. Social Security provides retirement benefits and disability income but also does not have provisions related to tax relief for long-term care insurance. Thus, HIPAA stands out as the correct answer due to its specific focus on tax treatment for long-term care insurance policies.