Lawsuit settlements

[Ruub12]

I recieved a cash payout from a class action lawsuit against Genworth LTC insurance.  Is this taxable?

[Holly W1]

Hello Ruub12, 

Thank you for joining us today!  

It really depends on what the settlement was for.  If it was for qualified expenses that they did not properly reimburse to start with, then no, it is not taxable income.

If it was punitive damages for something they did wrong with Genworth LTC insurance, then yes, it is taxable. It also depends if this was a settlement for a qualified or non qualified contract. If it is a qualified contract, then no, it is not taxable. If it is not qualified, then yes, it is taxable. 

Again, thank you for joining us today!