If box 3 is not per diem, then reimbursed amount is expected. You do not say if tax qualified or not. A distribution is reported on Form 8853 Long-Term Care Insurance Contracts. Page 2 calculates any taxable portion.
You may not have any taxable income for the LTC depending on the situation.
1. If Box 3 is marked "Reimbursed Amount" and the policy is categorized as a Tax-Qualified Contract,
- the amount of money received can generally be excluded from the income being reported. The insurance company can tell you if your policy is considered a Tax-Qualified policy.
- A tax-qualified long term care insurance contract qualifies for favorable federal income tax treatment. If the policy only pays benefits that reimburse you for qualified long-term care expenses you will not owe federal income tax on these benefits.
2. If Box 3 is marked "Reimbursed Amount" and you have a Non-Tax Qualified Contract,
- some or all of your benefits may be taxable. Again, the insurance company can tell you if your policy is considered a Non-Tax Qualified policy.
- A Non-Tax Qualified policy may result in a tax liability. Today, most long-term care policies are tax-qualified.
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