The short version

They are two different riders, written under two different parts of the Internal Revenue Code. The industry uses the phrase “long-term care rider” loosely for both.

  • A §7702B rider is long-term care insurance attached to a life policy. It is filed and priced as long-term care coverage, and it can be sold and described as such.
  • A §101(g) chronic illness rider is an accelerated death benefit. It can pay when you are chronically ill — but a policy carrying only a 101(g) rider cannot hold itself out as offering a long-term care benefit.

Both can put money in your hand to pay for care, which is why most pages on this subject treat them as the same thing. They are not. The difference shows up in how the rider is filed, what has to happen before it pays, how the charge is disclosed and how the money is taxed.

The one question that settles it

Before you compare anything else, ask the person selling the policy, or the company that already issued yours: “Which section is this rider written under — 7702B or 101(g)?”

It is a short question with a documented answer, and the answer is in the contract. Every other difference on this page follows from it, and anyone who cannot answer it has not read your policy.

The differences, one at a time

1. What it legally is

A §7702B rider is long-term care insurance. A §101(g) rider accelerates a death benefit you already own. Same money, different legal object — and that drives the filing, the disclosure and how it may be marketed.

2. Whether it can be called long-term care coverage

This is the sharpest line. A §7702B rider is filed as long-term care insurance and can be sold under that name. A policy whose only care provision is a §101(g) chronic illness rider cannot be marketed as offering a long-term care benefit. If you were told you were buying long-term care coverage and you hold a 101(g) rider, the conversation and the contract did not match.

3. What triggers it

A qualified §7702B rider uses the definition of a chronically ill individual at 26 U.S.C. §7702B(c)(2). A licensed health care practitioner must certify that you are unable to perform, without substantial assistance from another person, at least 2 of the 6 activities of daily living for at least 90 days due to loss of functional capacity — or that you need substantial supervision to protect you from threats to health and safety because of severe cognitive impairment. The statute also allows a similar level of disability determined under Treasury regulations, and the certification must have been made within the preceding 12 months.

The six activities of daily living named in the statute are:

  • eating
  • toileting
  • transferring
  • bathing
  • dressing
  • continence

A contract's own test has to take at least 5 of the 6 into account.

A §101(g) chronic illness rider works from a related idea but generally requires the condition to be permanent, where a §7702B rider contemplates a care need expected to last 90 days or more, temporary or permanent. If your need is severe but there is a realistic prospect of recovery, that difference can decide whether a claim pays at all.

4. How it pays, and how it is taxed

A §7702B rider pays on a reimbursement basis (actual qualified costs, up to a monthly maximum) or on a per diem, indemnity basis (a set amount per day regardless of cost). Per-diem payments run into a statutory ceiling, covered in the next section.

A §101(g) rider is tax-favoured when it reimburses qualified costs; per-diem style payouts above the limit can be taxable. We are not tax advisers — that is the rule as written, and applying it to your return belongs to your tax professional.

5. How the charge is disclosed

A §7702B rider is priced and filed as long-term care coverage, so its cost is visible in that framework. On a §101(g) rider the charge may be assessed at claim rather than quoted up front, so the cost of adding it can look like nothing until the day you use it. That is in the contract rather than hidden — but it makes a naive side-by-side on price misleading.

The per diem limit for 2026, and the two wrong numbers

For calendar year 2026, the IRS per diem limitation under §7702B(d)(4) is $430 per day. That is read directly from Revenue Procedure 2025-32 at §3.62. For 2025 it was $420, under Revenue Procedure 2024-40.

Two other figures are in circulation and both are wrong in different ways:

  • $440. A number of secondary sources are publishing this as the 2026 limit. It is not the 2026 limit.
  • $175. The statute's own stated dollar amount, set in 1997 and indexed for inflation ever since under §7702B(d)(5). Reading the raw statute without the current revenue procedure gives you a figure from 1997.

Mechanically, §7702B(d)(2) applies the limit to the excess of the greater of the per diem amount or your actual qualified costs, over reimbursements received. Payments above it are includible in gross income.

What makes the underlying contract “qualified”

§7702B(b)(1) sets conditions for a qualified long-term care insurance contract. Among them: the only insurance protection provided is coverage of qualified long-term care services; it does not duplicate Medicare except where Medicare is secondary payor; it is guaranteed renewable; it has no cash surrender value; and refunds and dividends go to reducing future premiums or increasing future benefits.

Those conditions are also why qualified long-term care premium gets its own treatment in the tax code. Revenue Procedure 2025-32 at §3.27 caps how much counts as a medical expense per insured person for 2026, by attained age at the close of the tax year: $500 at 40 or less, $930 for more than 40 up to 50, $1,860 for more than 50 up to 60, $4,960 for more than 60 up to 70, and $6,200 over 70.

Those caps apply to qualified long-term care premium. How much of a combined contract's premium counts as that depends on the carrier's tax reporting, and it is a question for your tax professional. We will not assert an allocation.

So which one should you want?

We are not going to tell you one is better; that depends on what you are trying to solve and what you can be issued. What we will say is that you should know which one you have, and that the two should not be compared as though they were the same product.

If what you want is long-term care coverage — filed, priced and regulated as such, with a trigger that does not require permanence — a 101(g) rider is not that thing, whatever it was called in the meeting. If what you want is a life policy with a safety valve in case of serious permanent illness, a 101(g) rider may be exactly right.

The general mechanics of both sit on what a long-term care rider is. How a claim actually moves money is on how life insurance with a long-term care rider works. The product category these riders are usually sold inside is covered on hybrid long-term care insurance, and the annuity version on whether an annuity can have a long-term care rider.

Why the distinction is worth your attention now rather than later

Because the moment it matters is the worst possible moment to find out. The 2025 CareScout Cost of Care Survey, released in March 2026, puts the national median for a private nursing home room at $355 a day — $129,575 a year — and assisted living at $6,200 a month, and the U.S. Department of Health and Human Services projected in 2022 an average need of 3.1 years. Discovering at that point that the rider requires permanence, or was never filed as long-term care coverage, is an expensive surprise. Whether traditional standalone coverage is the better route is weighed on how much long-term care insurance costs.

How The Jordan Insurance Agency helps

Bring us the contract — one you are considering, or one you have owned for a decade — and we will tell you which section the rider is written under, what the contract's own activities-of-daily-living test requires, whether the trigger demands permanence, how the benefit is paid and how the charge is assessed. Then we will tell you plainly whether what you hold is what you thought you held. We never say one rider, policy or company is better than another, and we never tell a client they will be approved. Underwriting decides that. Reading the contract is our part.

The Jordan Insurance Agency is an independent, licensed insurance agency based at 3540 Toringdon Way, Suite 200, Charlotte, NC 28277. You can reach us at (704) 926-7565, Monday through Friday, 9:00 AM to 5:00 PM Eastern. Because we are independent we represent multiple carriers rather than one, and we read the contract language rather than the brochure. A consultation with a licensed agent is free.