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Recalibrating Retirement Spending and Saving$
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John Ameriks and Olivia S. Mitchell

Print publication date: 2008

Print ISBN-13: 9780199549108

Published to Oxford Scholarship Online: January 2009

DOI: 10.1093/acprof:oso/9780199549108.001.0001

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Tax Issues and Life Care Annuities

Tax Issues and Life Care Annuities

(p.295) Chapter 13 Tax Issues and Life Care Annuities
Recalibrating Retirement Spending and Saving

David Brazell

Jason Brown

Mark Warshawsky

Oxford University Press

A life care annuity combines an immediate life annuity with long-term care insurance. This chapter reviews empirical evidence supporting the claim that the marketing of a life care annuity will produce a lower total price for the combined product, less adverse selection in the individual annuity market, and greater availability of long-term care insurance. It also discusses the institutional, regulatory, and tax aspects of a life care annuity, including its future tax treatment under the recently enacted Pension Protection Act of 2006. The chapter concludes with a numerical illustration of the tax implications of various ways of structuring the life care annuity, and it compares these implications with those produced by an above-the-line deduction for qualified long-term care insurance premiums.

Keywords:   life care annuity, long-term care insurance, costs of care, retirement income, insurance value, disability, healthcare, premium charge, taxable income

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