Arizona Life and Health Practice Exam

Employer paid qualified long-term care insurance premiums are typically considered in which manner for employees?

1. Counted as taxable income

2. Excluded from the employees' gross income

3. Deductible from taxes

4. Reported as fringe benefits

The correct answer is: Excluded from the employees' gross income

Employer-paid qualified long-term care insurance premiums are generally excluded from employees' gross income. This means that when an employer pays for a long-term care insurance policy on behalf of its employees, the premiums do not count as taxable income for those employees. This treatment is designed to encourage the uptake of long-term care insurance by reducing the tax burden on both the employer and employee. As a result, employees can receive these benefits without their tax liability being increased, making it a more attractive option for both parties. These premiums are not considered taxable income because they fall under specific provisions that govern qualified long-term care insurance and the benefits provided therein. This exclusion helps support employees in securing necessary long-term care without facing additional taxation on the insurance premiums paid by their employer.