Thanks for the reply. My own efforts to find a resolution to this in which I am not going to have to pay a large amount of tax on income I sent back to the insurance company a matter of weeks later have so far been fruitless. It appears that there is no way to avoid this situation, despite how innately unfair the whole thing is.
In any case, thanks again. I have done my homework on the "Claim of Right" procedure, and I have a good feel for what that will entail, though it will be next year. I'll post an update if anything changes.
