Internal Revenue Code · 26 U.S.C.
§ 7702B. Treatment of qualified long-term care insurance
Official text, no changes From the Office of the Law Revision Counsel, release point 119-121 (current through Public Law 119-121 (October 9, 2026)). Compare it with the official text at uscode.house.gov (external site).
Cite as 26 U.S.C. § 7702B
At a glance
Read from the text, the source credit and the official notes. Not part of the law.
- Status
- In force
- Added
- August 21, 1996 by Pub. L. 104–191
- Last amended
- August 17, 2006 by Pub. L. 109–280
- Amendments
- 4 dated changes in the source credit
- Length
- 7 subsections · 2,420 words · about 11 min to read
- Defines
- 10 terms
- Cross-references
- cites 15; cited by 11 Code sections and 6 other regulations
- Regulations
- 2 issued under this section
A contract shall not fail to be described in subparagraph (A) or (B) of paragraph (1) by reason of payments being made on a per diem or other periodic basis without regard to the expenses incurred during the period to which the payments relate.
Paragraph (1)(E) shall not apply to any refund on the death of the insured, or on a complete surrender or cancellation of the contract, which cannot exceed the aggregate premiums paid under the contract. Any refund on a complete surrender or cancellation of the contract shall be includible in gross income to the extent that any deduction or exclusion was allowable with respect to the premiums.
The term “maintenance or personal care services” means any care the primary purpose of which is the provision of needed assistance with any of the disabilities as a result of which the individual is a chronically ill individual (including the protection from threats to health and safety due to severe cognitive impairment).
The term “licensed health care practitioner” means any physician (as defined in section 1861(r)(1) of the Social Security Act) and any registered professional nurse, licensed social worker, or other individual who meets such requirements as may be prescribed by the Secretary.
The dollar amount in effect under this subsection shall be $175 per day (or the equivalent amount in the case of payments on another periodic basis).
In the case of a calendar year after 1997, the dollar amount contained in paragraph (4) shall be increased at the same time and in the same manner as amounts are increased pursuant to section 213(d)(10).
For purposes of this subsection, the term “periodic payment” means any payment (whether on a periodic basis or otherwise) made without regard to the extent of the costs incurred by the payee for qualified long-term care services.
This title shall apply as if the portion of the contract providing such coverage is a separate contract.
No deduction shall be allowed under section 213(a) for any payment made for coverage under a qualified long-term care insurance contract if such payment is made as a charge against the cash surrender value of a life insurance contract or the cash value of an annuity contract.
For purposes of this subsection, the term “portion” means only the terms and benefits under a life insurance contract or annuity contract that are in addition to the terms and benefits under the contract without regard to long-term care insurance coverage.
The terms “model regulation” and “model Act” mean the long-term care insurance model regulation, and the long-term care insurance model Act, respectively, promulgated by the National Association of Insurance Commissioners (as adopted as of January 1993).
Any provision of the model regulation or model Act listed under clause (i) or (ii) of subparagraph (A) shall be treated as including any other provision of such regulation or Act necessary to implement the provision.
For purposes of this section and section 4980C, the determination of whether any requirement of a model regulation or the model Act has been met shall be made by the Secretary.
The requirement of this paragraph is met with respect to any contract if such contract meets the requirements of section 4980C(d).
The requirements of this paragraph are met with respect to any level premium contract, if the issuer of such contract offers to the policyholder, including any group policyholder, a nonforfeiture provision meeting the requirements of subparagraph (B).
For coordination of the requirements of this subsection with State requirements, see section 4980C(f).
(Added and amended Pub. L. 104–191, title III, §§ 321(a), 325, Aug. 21, 1996, 110 Stat. 2054, 2063; Pub. L. 105–34, title XVI, § 1602(b), (e), Aug. 5, 1997, 111 Stat. 1094; Pub. L. 105–206, title VI, § 6023(28), July 22, 1998, 112 Stat. 826; Pub. L. 108–311, title II, § 207(25), Oct. 4, 2004, 118 Stat. 1178; Pub. L. 109–280, title VIII, § 844(c), (f), Aug. 17, 2006, 120 Stat. 1011, 1013.)
Terms defined here
Where the text says “the term … means”. Select a term to jump to its definition.
- chronically ill individual § 7702B(c)(2)(A)
- licensed health care practitioner § 7702B(c)(4)
- maintenance or personal care services § 7702B(c)(3)
- model Act § 7702B(g)(2)(B)(i)
- model regulation § 7702B(g)(2)(B)(i)
- periodic payment § 7702B(d)(6)
- portion § 7702B(e)(3)
- qualified long-term care insurance contract § 7702B(b)(1)
- qualified long-term care services § 7702B(c)(1)
- State long-term care plan § 7702B(f)(2)
Regulations under this section
Treasury regulations (26 CFR) issued under § 7702B
Cross-references
Computed from the citations in the text of Title 26 and 26 CFR.
This section cites 15 other sections
- § 808 Policyholder dividends deduction
- § 213(d) Medical, dental, etc., expenses
- § 816(e) Life insurance company defined
- § 101(g) Certain death benefits
- § 72 Annuities; certain proceeds of endowment and life insurance contracts
- § 401(a) Qualified pension, profit-sharing, and stock bonus plans
- § 501(a) Exemption from tax on corporations, certain trusts, etc.
- § 403(a) Taxation of employee annuities
- § 818(a)(3) Other definitions and special rules
- § 404(k) Deduction for contributions of an employer to an employees’ trust or annuity plan and compensation under a deferred-payment plan
- § 152(d)(2) Dependent defined
- § 11 Tax imposed
- § 12 Cross references relating to tax on corporations
- § 23 Adoption expenses
- § 4980C Requirements for issuers of qualified long-term care insurance contracts
Cited by 11 Code sections
- § 101(g)(3)(A)(ii)(I) Certain death benefits
- § 106(c)(1) Contributions by employer to accident and health plans
- § 162(l)(2)(B)(i) Trade or business expenses
- § 213(d)(1)(C) Medical, dental, etc., expenses
- § 220(d)(2)(B)(ii)(II) Archer MSAs
- § 223(d)(2)(C)(ii) Health savings accounts
- § 401(a)(9)(E)(ii)(IV) Qualified pension, profit-sharing, and stock bonus plans
- § 402(l)(4)(D) Taxability of beneficiary of employees’ trust
- § 818(g)(3) Other definitions and special rules
- § 4980B(g)(2) Failure to satisfy continuation coverage requirements of group health plans
- § 4980C(c)(1)(C) Requirements for issuers of qualified long-term care insurance contracts
Cited in 6 regulations not issued under it
- § 1.197-2 Amortization of goodwill and certain other intangibles.
- § 1.401(a)(9)-4 Determination of the designated beneficiary.
- § 1.402(a)-1 Taxability of beneficiary under a trust which meets the requirements of section 401(a).
- § 1.832-4 Gross income.
- § 54.4980B-2 Plans that must comply.
- § 54.9831-1 Special rules relating to group health plans.
Amendment history
From the source credit and the official notes, newest first.
- Amended by Pub. L. 109–280Parts changed in 2006: (e) (e)(1)
- Amended by Pub. L. 108–311Parts changed in 2004: (f)(2)(C)(iii)
- Amended by Pub. L. 105–206Parts changed in 1998: (e)(2)
- Amended by Pub. L. 105–34Parts changed in 1997: (c)(2)(B) (g)(4)(B)(ii)
- Added by Pub. L. 104–191Parts changed in 1996: (g)
Where it sits in the Code
Nearby sections
- § 7701 Definitions
- § 7702 Life insurance contract defined
- § 7702A Modified endowment contract defined
- § 7702B Treatment of qualified long-term care insurance
- § 7703 Determination of marital status
- § 7704 Certain publicly traded partnerships treated as corporations
- § 7705 Certified professional employer organizations
Official notes
Show the Law Revision Counsel's notes (amendments, effective dates)
Inflation Adjusted Items for Certain Years
For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under section 1 of this title.
Editorial Notes
References in Text
The Social Security Act, referred to in subsec. (b)(1)(B), (2)(B)(i), is act Aug. 14, 1935, ch. 531, 49 Stat. 620. Title XVIII of the Act is classified generally to subchapter XVIII (§ 1395 et seq.) of chapter 7 of Title 42, The Public Health and Welfare. Section 1861(r)(1) of the Act is classified to section 1395x(r)(1) of Title 42. For complete classification of this Act to the Code, see section 1305 of Title 42 and Tables.
Amendments
2006—Subsec. (e). Pub. L. 109–280, § 844(c), amended subsec. (e) generally. Prior to amendment, subsec. (e) related to treatment of coverage provided as part of a life insurance contract.
Subsec. (e)(1). Pub. L. 109–280, § 844(f), substituted “title” for “section”.
2004—Subsec. (f)(2)(C)(iii). Pub. L. 108–311 substituted “subparagraphs (A) through (G) of section 152(d)(2)” for “paragraphs (1) through (8) of section 152(a)”.
1998—Subsec. (e)(2). Pub. L. 105–206 inserted “section” after “Application of” in heading.
1997—Subsec. (c)(2)(B). Pub. L. 105–34, § 1602(b), inserted “described in subparagraph (A)(i)” after “chronically ill individual” in concluding provisions.
Subsec. (g)(4)(B)(ii), (iii)(IV). Pub. L. 105–34, § 1602(e), substituted “appropriate State regulatory agency” for “Secretary”.
1996—Subsec. (g). Pub. L. 104–191, § 325, added subsec. (g).
Statutory Notes and Related Subsidiaries
Effective Date of 2006 Amendment
Amendment by Pub. L. 109–280 applicable to contracts issued after Dec. 31, 1996, but only with respect to taxable years beginning after Dec. 31, 2009, except as otherwise provided, see section 844(g)(1) of Pub. L. 109–280, set out as a note under section 72 of this title.
Amendment by section 844(f) of Pub. L. 109–280 effective as if included in section 321(a) of Pub. L. 104–191, see section 844(g)(5) of Pub. L. 109–280, set out as a note under section 72 of this title.
Effective Date of 2004 Amendment
Amendment by Pub. L. 108–311 applicable to taxable years beginning after Dec. 31, 2004, see section 208 of Pub. L. 108–311, set out as a note under section 2 of this title.
Effective Date of 1997 Amendment
Amendment by Pub. L. 105–34 effective as if included in the provisions of the Health Insurance Portability and Accountability Act of 1996, Pub. L. 104–191, to which such amendment relates, see section 1602(i) of Pub. L. 105–34, set out as a note under section 26 of this title.
Effective Date of 1996 Amendment
Amendment by section 325 of Pub. L. 104–191 applicable to contracts issued after Dec. 31, 1996, with provisions of section 321(f) of Pub. L. 104–191, set out as an Effective Date note below, applicable to such contracts, see section 327 of Pub. L. 104–191, set out as an Effective Date note under section 4980C of this title.
Effective Date
Pub. L. 104–191, title III, § 321(f), Aug. 21, 1996, 110 Stat. 2059, provided that:
“(1) General effective date.—“(A) In general.— Except as provided in subparagraph (B), the amendments made by this section [enacting this section and amending sections 106, 125, 807, and 4980B of this title, section 1167 of Title 29, Labor, and section 300bb–8 of Title 42, The Public Health and Welfare] shall apply to contracts issued after December 31, 1996.“(B) Reserve method.— The amendment made by subsection (b) [amending section 807 of this title] shall apply to contracts issued after December 31, 1997.“(2) Continuation of existing policies.— In the case of any contract issued before January 1, 1997, which met the long-term care insurance requirements of the State in which the contract was sitused [sic] at the time the contract was issued—“(A) such contract shall be treated for purposes of the Internal Revenue Code of 1986 as a qualified long-term care insurance contract (as defined in section 7702B(b) of such Code), and“(B) services provided under, or reimbursed by, such contract shall be treated for such purposes as qualified long-term care services (as defined in section 7702B(c) of such Code).In the case of an individual who is covered on December 31, 1996, under a State long-term care plan (as defined in section 7702B(f)(2) of such Code), the terms of such plan on such date shall be treated for purposes of the preceding sentence as a contract issued on such date which met the long-term care insurance requirements of such State.“(3) Exchanges of existing policies.— If, after the date of enactment of this Act [Aug. 21, 1996] and before January 1, 1998, a contract providing for long-term care insurance coverage is exchanged solely for a qualified long-term care insurance contract (as defined in section 7702B(b) of such Code), no gain or loss shall be recognized on the exchange. If, in addition to a qualified long-term care insurance contract, money or other property is received in the exchange, then any gain shall be recognized to the extent of the sum of the money and the fair market value of the other property received. For purposes of this paragraph, the cancellation of a contract providing for long-term care insurance coverage and reinvestment of the cancellation proceeds in a qualified long-term care insurance contract within 60 days thereafter shall be treated as an exchange.“(4) Issuance of certain riders permitted.— For purposes of applying sections 101(f), 7702, and 7702A of the Internal Revenue Code of 1986 to any contract—“(A) the issuance of a rider which is treated as a qualified long-term care insurance contract under section 7702B, and“(B) the addition of any provision required to conform any other long-term care rider to be so treated,shall not be treated as a modification or material change of such contract.“(5) Application of per diem limitation to existing contracts.— The amount of per diem payments made under a contract issued on or before July 31, 1996, with respect to an insured which are excludable from gross income by reason of section 7702B of the Internal Revenue Code of 1986 (as added by this section) shall not be reduced under subsection (d)(2)(B) thereof by reason of reimbursements received under a contract issued on or before such date. The preceding sentence shall cease to apply as of the date (after July 31, 1996) such contract is exchanged or there is any contract modification which results in an increase in the amount of such per diem payments or the amount of such reimbursements.”
Long-Term Care Study Request
Pub. L. 104–191, title III, § 321(g), Aug. 21, 1996, 110 Stat. 2060, related to a study of the marketing and other effects of per diem limits on certain types of long-term care policies, and provided that if the National Association of Insurance Commissioners agreed to the study request by Congress, the Association would report the results of the study not later than 2 years after accepting the request.