I appreciate the answer but it leaves an ambiguity that I hope the poster will address and it is specifically this: The Genworth LTC Insurance is a “qualified” plan based on the IRS description of “qualified”. Some of the options for current subscribers include a pay-out of cash (I think up to $10K) which is clearly not a “benefit” of the original plan. Assuming (and I could be wrong here) that the cash settlement is not a “punitive” award (since the company admitted to no wrong-doing), is it then taxable? It would seem it would be simply because any premiums paid to date were tax-deductible under IRS rules.
My thanks in advance for addressing this ambiguity.
