Is Long Term Care Insurance Income Taxable? 
P ayment of long-term care costs from a long-term care insurance -LRB- LTCi -RRB- policy may be taxable if one owns a `` non-qualified '' -LRB- NTQ -RRB- long-term care policy . There may be a few carriers out there that still sell them . However , most carriers exclusively sell only `` tax-qualified '' LTCi -LRB- TQ -RRB- policies , the payouts from which are not subject to being taxed as regular income . If one owns an NTQ policy , it is important to check to see if it was re-categorized TQ by the carrier . There was a period of time in the mid-90s in which coverage design for TQ policies was mandated , but NTQ policies sold prior to that time were allowed to become considered TQ if the policy owner requested it . For some carriers , it was an automatic retro-action . If in doubt , call the carrier 's claims department to determine the tax treatment of an LTCi policy sold before 1998 , even if the title page of the policy in question specifically states that it is `` not tax qualified '' . A definitive answer may not be given - one may be referred to a qualified tax professional for a final determination . Nothing in this answer is intended to be construed as tax advice . For a specific tax situation , go to www.irs.gov or consult with a qualified tax advisor . 