Appendix G -TQ Comparison Chart

(1) POLICIES INTENDED TO QUALIFY FOR TAXBENEFITS

(2) POLICIES NOT INTENDED TO QUALIFY FOR TAX BENEFITS

(A) ELIGIBILITY FOR BENEFITS

(A) ELIGIBILITY FOR BENEFITS

You will not be paid for any long term care benefits

You will not be paid for any long term care

until:

benefits until:

You are unable to do 2 out of 6 ADLs

You are unable to do 2 out of 7 ADLs (Activities

(Activities of Daily Living) which include

of Daily Living) which include

• bathing

• bathing

• dressing

• dressing

• continence

• continence

• toileting

• toileting

• transferring

• transferring

• eating

• eating

OR

• ambulating (this added ADL may make it

You need help due to Severe Cognitive Impairment

easier to qualify for home care benefits)

OR

(Please see the Outline Of Coverage for a definition

You need help due to Cognitive Impairment

of each of the above ADL terms)

(Please see the Outline Of Coverage for a

definition of each of the above ADL terms)

A health care practitioner must certify that the

No 90-day certification re!•juirement. Some

insured will need assistance with Activities of Daily

policies may provide benefits for serious

living for a period of 90 days.

illnesses of less than 90 days.

(Please see the Outline Of Coverage for your

policy provisions)

In general, no policy benefits can be paid for

In general, there are no limitations regarding the

services covered by Medicare or be applied to pay

use of policy benefits for Medicare related

for Medicare deductibles or copayments

services.

(B) FEDERAL AND STATE TAX TREATMENT

(B) FEDERAL AND STATE TAX TREATMENT

Premiums are intended to be deductible as a

Premiums are not intended to be deductible on

medical expense if you itemize deductions on your

your tax returns.

tax returns.

Medical expenses must exceed 7.5% of your

adjusted gross income.

The amount you can deduct is capped, based on

your age and adjusted gross income

Benefits paid under the policy are not intended to

Benefits paid under the policy may or may not be

be taxed as income

taxed as income

Should the IRS treat these benefits as taxable

income, the costs you pay for care may or may

not be eligible as an offsetting tax deduction.

Neither federal law, nor the IRS, has taken a

position on these issues.

If you have further questions regarding your choice of policies, you may wish to contact your local

Health Insurance Counseling and Advocacy Program HICAP office which provides long term care

counseling free of charge. Your insurance agent or insurer is required to provide you with the name,

address, and telephone number of your local HICAP office. The statewide HICAP telephone number is

1-800-434-0222.

As noted above, long term care benefits paid under policies that meet California’s standards but that are

not intended to qualify for fax benefits may or may not be taxable as income. If the U.S. Congress or the

IRS resolves this issue, you will be provided a one-time opportunity to EXCHANGE POLICIES. If this

issue is resolved, you will be notified by your insurer that you may exchange your policy regardless of

whether or not intended to qualify for tax benefits. The exchanged policy will be issued without any

additional evidence of insurability and the new policy premium (which may be lower or higher) will be

based on your age at the time you were issued the original policy. However, you will not be allowed to

exchange policies if you are receiving long term care benefits under your policy at the time of the notice,

or if the exchange would make you immediately eligible to receive benefits.

If you have questions about the potential tax impacts of these two types of policies, you may wish to

consult a TAX ADVISER before deciding which type of policy you wish to purchase.

Your agent or insurer is required by law to provide you with this form which displays the major

differences between these two types of policies. Before signing this disclosure form and your

application, please discuss with your agent or insurer the above side-by-side comparison information

regarding these two types of policies.

Applicant ________________________________Agent or Insurerrurer_________________________________

Date: ___________________________________Date: _______________________________________________

A copy of this form is to be provided to the applicant