**LTCSO is considered a qualified living benefit under IRS
regulations. As such, the net amount of the death benefit is excluded
from gross income and, as long as the total annual payments do not
exceed IRS guidelines, it is not generally subject to federal or state
income tax. AAFMAA provides an IRS Form 1099-LTC each year summarizing
all distributions. If an irrevocable trust is the plan owner, a tax
advisor should be consulted prior to exercising this option.