Question

Valentino is a patient in a nursing home for 51 days of 2020. While in the nursing home, he incurs total costs of $23,256. Medicare pays $13,954 of the costs. Valentino receives $25,582 from his long-term care insurance policy, which pays while he is in the facility. Assume that the Federal daily excludible amount for Valentino is $380. Of the $25,582, what amount may Valentino exclude from his gross income?

Answer 1

*Gross Annual Income is the total amount that an individual or a company earns during a year.

A person who purchases his / her own Policy can exclude the benefits from the gross income.

Therefore , the amount Valentino may exclude will be calculated as follows :-

Daily Statutory amount or federal amount in 2020 = $ ( 380× 51 ) days = $ 19,380

Actual cost of care = $ 23,256

So,

Daily federal amount = $ 19,380

Less : amount received from medicare ($ 13,954)

= Amount of exclusion i.e ( $ 5426)

Thus ,

Valentino must take ( $ 25,582 - $ 5426) =$ 20,156 of the long term care benefits received in his gross income.