Form 1099-LTC Box by Box and When Form 8853 Section C Applies
Boxes 1 to 5 of Form 1099-LTC, the per diem vs reimbursed check box, and how Form 8853 Section C finds taxable benefits. Limit $430 in 2026, $445 in 2027.
Most people who receive a Form 1099-LTC cannot tell from it what they owe, and that is by design. The payer’s job is to report, not to decide, and the real work happens on a form most households never otherwise see: Form 8853, which covers Archer MSAs and long-term care contracts. This guide walks through each box on the 1099-LTC, then through the part of Form 8853 that turns a per diem payment into a taxable number, with one worked example I recomputed with the IRS formula. One warning up front: the 2026 Form 8853 and its instructions are still drafts (the IRS posted the form on May 4, 2026 and the instructions on September 22, 2026), so confirm the line numbers against the final versions before you file.
What each box on Form 1099-LTC means
The form is titled “Long-Term Care and Accelerated Death Benefits,” and the current revision is dated April 2025. According to the IRS instructions, the insurer must furnish Copy B to the policyholder and Copy C to the insured. Copy C carries a notice that it is “provided to you for information only. Only the policyholder is required to report this information on a tax return.” If you own the policy and are also the person receiving care, you get Copy B.
Box 1, gross long-term care benefits paid. The insurer enters “all amounts paid out on a per diem or other periodic basis or on a reimbursed basis,” including payments to the insured, to the policyholder and to third parties. The instructions add that the payer is “not required to determine whether any benefits are taxable or nontaxable.” Treat box 1 as a gross figure, not a taxable one.
Box 2, accelerated death benefits paid. This is the life insurance side. It shows what a life insurer, or a viatical settlement provider that bought the policy, paid because the insured was terminally or chronically ill.
Box 3, per diem or reimbursed amount. This is the key box. The Copy B text says it “shows if the amount in box 1 or 2 was paid on a per diem basis or was reimbursement of actual long-term care expenses.” The instructions define the terms: “per diem basis” means payments made “on any periodic basis without regard to actual expenses,” while “reimbursed basis” means payments made “for actual expenses incurred.” One exception is worth knowing: the payer instructions say not to check a box for accelerated death benefits paid on behalf of a terminally ill person, which is why Copy B warns that if the insured was terminally ill, “this box may not be checked.”
Box 4, qualified contract. Optional. The insurer may check it to show the benefits came from a qualified long-term care insurance contract. The distinction carries through to Form 8853, where line 18 asks for the part of your per diem total that came from qualified contracts. If the box is blank and you are unsure, ask the insurer.
Box 5, chronically ill or terminally ill. Also optional. The insurer may check whether the insured was chronically or terminally ill and enter the latest date certified. The instructions define a chronically ill individual as someone certified at least annually by a licensed health care practitioner as unable to perform, without substantial assistance from another individual, at least two daily living activities (eating, toileting, transferring, bathing, dressing, continence) for at least 90 days due to a loss of functional capacity, or as needing substantial supervision because of severe cognitive impairment. A terminally ill individual has been certified by a physician as having an illness or physical condition that can reasonably be expected to result in death in 24 months or less after the date of certification.
Why per diem payments are the ones that can be taxed
The Form 8853 instructions put the rule in two sentences: “In general, amounts paid under a qualified LTC insurance contract are excluded from your income. However, if you receive Per Diem Payments (defined next), the amount you can exclude is limited.” Reimbursements of actual care costs sit comfortably inside the first sentence. Per diem payments, which are fixed amounts paid regardless of what care actually cost, are the ones with a cap.
The cap has a built-in cushion. You take the larger of two things, the daily limit multiplied by the days in the period or your actual qualified care costs, and then subtract any reimbursements. For 2026 the daily limit is $430, and the instructions mark the figure with a footnote: “$430 is the 2026 per diem limit for periodic payments received under a qualified LTC insurance contract.” For 2027 it rises to $445. Rev. Proc. 2026-35 says so in section 3.67: “For calendar year 2027, the stated dollar amount of the per diem limitation under § 7702B(d)(4) … is $445.” The reason that number looks odd next to older round figures is covered in our look at the 2027 long-term care premium and per diem limits, and the broader table sits in the IRS 2027 inflation adjustments tracker.
When Form 8853 Section C is required, and when it is not
Section C of the form sends you first to a flow chart in the instructions, “Filing Requirements for Section C,” which you go through for each insured person. It asks whether you received payments on a per diem or other periodic basis under a long-term care contract, and whether you received accelerated death benefits from a life insurance policy on a per diem or periodic basis. If the answer to both is no, which is the usual result when box 3 on every 1099-LTC you received says reimbursed amount, the chart’s instruction is “Don’t complete Section C.” The instructions’ filing rules also list the trigger for filing Form 8853 at all: you were “a policyholder who received payments under an LTC insurance contract or received any accelerated death benefits from a life insurance policy on a per diem or other periodic basis.”
Who counts as the policyholder? The instructions define it as “the person who owns the LTC insurance contract, the life insurance contract, or the viatical settlement contract,” and add that in a group contract the certificate holder is the policyholder. The consequence surprises families: “The policyholder is required to report the income, even if payment is assigned to a third party or parties.” If your mother owns the policy and the insurer pays the facility directly, the 1099-LTC and the Section C math still belong with the policyholder’s return.
The Section C lines in plain English
The draft form works from top to bottom. Line 17 totals box 1 from every 1099-LTC for that insured with “Per diem” checked in box 3. Line 18 keeps the part that came from qualified contracts, line 19 adds per diem accelerated death benefits received while the insured was chronically ill (not terminally ill), and line 20 adds them together. Then the limit comes in: line 21 multiplies $430 by the number of days in your long-term care period, line 22 lists costs you incurred for qualified services, and line 23 takes the larger of those two. Line 24 subtracts reimbursements, which gives the per diem limitation on line 25. Line 26 is the answer: line 20 minus line 25, never below zero. The form tells you to include that amount in the total on Schedule 1 (Form 1040), line 8e.
The number of days depends on the method you choose. Under the contract period method, your period is the one the insurer uses to compute benefits, so a daily-benefit policy means a period of one day. Under the equal payment rate method, your period is the stretch during which the insurer pays at the same rate. If you have more than one period, the instructions require a separate Section C for each. If other people also received per diem payments for the same insured, such as adult children who each own a policy, the instructions require an aggregate statement and a shared limit.
A worked example with the IRS formula
Take Daniel, who owns a qualified policy and is also the insured. He was certified as chronically ill and began receiving benefits on July 1, 2026. The policy pays $600 per day, a flat amount, through December 31. His Form 1099-LTC shows $110,400 in box 1, “Per diem” checked in box 3, and box 4 checked. Daniel incurred $52,000 in qualified care costs during that time, and nothing was reimbursed. He uses the equal payment rate method, and because the rate never changes he has a single 184-day period.
I recomputed the lines in Python with the formula above, and the same script reproduces the IRS’s own Example 1 in the instructions (Alex, $156,950 on line 21) to confirm the method.
| Line | Amount | How it is figured |
|---|---|---|
| 20 | $110,400 | $600 x 184 days |
| 21 | $79,120 | $430 x 184 days |
| 22 | $52,000 | Qualified care costs |
| 23 | $79,120 | Larger of line 21 or line 22 |
| 24 | $0 | No reimbursements |
| 25 | $79,120 | Line 23 minus line 24 |
| 26 | $31,280 | Line 20 minus line 25 |
Daniel includes $31,280 in the Schedule 1, line 8e total. His actual care costs were well below the $79,120 allowance, so the allowance governs. If his costs had been $95,000, line 23 would have been $95,000, line 25 would match it, and the taxable amount would drop to $15,400. Keeping receipts for care matters once benefits run above the daily limit. Under the 2027 limit, the same facts with benefits paid in 2027 would produce a line 21 of $81,880 ($445 x 184) and $28,520 taxable, though the line numbers should be checked against the 2027 form once it is released. All of this assumes a qualified contract. The form cautions against using lines 18 through 26 for a contract that is not qualified and says to report any amount not excludable on Schedule 1, line 8e instead.
Don’t confuse this with Form 1099-LPS
The names are similar and the topic is the same, so the two forms are easy to mix up. Form 1099-LTC is the benefits form: money coming out of an insurance contract to pay for care. Form 1099-LPS, the “Long-Term Care Premiums Paid Statement,” is tied to the new option that lets a defined contribution plan such as a 401(k) make qualified long-term care distributions, with a threshold of $2,600 for 2026. It does not report the distribution, which comes on Form 1099-R. The insurer files it to report the premiums and charges paid for certified long-term care insurance when it has filed a long-term care premium statement with your plan. If you want that one, read our Form 1099-LPS and the $2,600 long-term care 401(k) withdrawal guide.
Sources
- IRS, Form 1099-LTC (Rev. April 2025), Copies A, B and C, boxes 1 to 5: https://www.irs.gov/pub/irs-pdf/f1099ltc.pdf
- IRS, Instructions for Form 1099-LTC (Rev. April 2025), including Reporting, Policyholder and the box instructions: https://www.irs.gov/pub/irs-pdf/i1099ltc.pdf
- IRS, Instructions for Form 8853 (2026), draft posted September 22, 2026, Section C, Filing Requirements for Section C and Example 1: https://www.irs.gov/pub/irs-dft/i8853—dft.pdf
- IRS, Form 8853 (2026), draft posted May 4, 2026, Section C, lines 14a to 26: https://www.irs.gov/pub/irs-dft/f8853—dft.pdf
- IRS, Form 1099-LPS (December 2026) and its instructions, early release drafts (box 1, Who Must File, $2,600 threshold for 2026): https://www.irs.gov/pub/irs-dft/f1099lps—dft.pdf and https://www.irs.gov/pub/irs-dft/i1099lps—dft.pdf
- IRS, Rev. Proc. 2026-35, section 3.67 (per diem limitation for 2027, $445): https://www.irs.gov/pub/irs-drop/rp-26-35.pdf
Quick answers
Is the amount in box 1 of Form 1099-LTC taxable?
Not by itself. The instructions tell the insurer to enter gross benefits and add that it is "not required to determine whether any benefits are taxable or nontaxable." Benefits from a qualified contract are generally excluded from income. Under a qualified contract, only per diem payments above the daily limit, adjusted for your actual costs and reimbursements, can become taxable, and Form 8853 Section C is where you work that out.
What is the long-term care per diem limit?
$430 a day for 2026, according to the draft 2026 Form 8853 instructions, and $445 a day for 2027, according to section 3.67 of Rev. Proc. 2026-35. The limit applies to periodic payments received under a qualified long-term care insurance contract, and the daily figure is multiplied by the number of days in your long-term care period.
The insurance company paid the nursing home directly. Do I still report it?
Yes, if you are the policyholder. The Form 8853 instructions say "The policyholder is required to report the income, even if payment is assigned to a third party or parties." The insurer must report benefits to the policyholder even when they are paid to the insured or to a third party such as a nursing home.
My 1099-LTC shows only reimbursed amounts. Do I need Section C?
Usually not. The Form 8853 instructions include a chart, "Filing Requirements for Section C," that you go through for each insured person, and if you received no payments on a per diem or other periodic basis and no per diem accelerated death benefits, its answer is "Don't complete Section C." Check box 3 first, because that box is how the insurer tells you which kind of payment it made.
Is Form 1099-LTC the same as Form 1099-LPS?
No. Form 1099-LTC reports long-term care benefits paid out by an insurer or a viatical settlement provider. Form 1099-LPS, the Long-Term Care Premiums Paid Statement (a December 2026 draft), is tied to the new qualified long-term care distributions from a defined contribution plan such as a 401(k). The insurer uses it to report the long-term care premiums and charges paid for the year, not benefits, and the plan distribution itself comes on Form 1099-R. Both involve long-term care insurance, but the money flows in opposite directions.
The insured was terminally ill. Is the payment taxable?
Generally not. The policyholder instructions on Copy B of Form 1099-LTC say accelerated death benefits are "fully excludable from your income if the insured has been certified by a physician as terminally ill." The payer is told not to check box 3 for accelerated death benefits paid on behalf of a terminally ill person, so that box may be blank. On Form 8853, if you answer "Yes" on line 16 (the insured was terminally ill) and the only payments you received were such benefits, the form says to skip lines 17 through 25 and enter -0- on line 26.
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