My Mother opted for a cash payout in lieu of continuing her Long Term care insurance which she had for 10+ years. It was a portion of her premiums. Is it taxable?

She may be taxed on the amount she received minus the policy basis, or the total premium payment she made on the policy. 

The difference between the total premiums paid and the total surrender value will be taxable income.  She will receive a form 1099 from her handling agency which will provide guidelines on how to report the income.

If the surrender value is indeed greater then the total premiums she paid, then this will be reported as Other Income on her tax return.