Question

Long Term Health Insurance Buy Out

Forum|Forum|4 years ago
August 31, 2021
1 reply
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In 1998 my wife and I purchased Long Term Health Care policies from Penn Treaty Network America Insurance Company. Over the next 21 years they increased rates and changed benefits until at the end of 2019 they went in liquidation and the policy became administrated by Washington Life and Disability Insurance Guarantee Association. Rate increases followed and in 2021 a further increase was in order. At that time a Buy Out provision was offered and we took it.

Over the years that we had these policies we paid a bit over $92,000 and the Buy Out was about $81,000.

What are the Tax implications or do I even need to make note of it on our 2021 Tax Filing?

M

Mike9241

see this link. you'll notice one of the cons is possible adverse tax consequences. like life insurance, there can be a difference between the premiums you paid and your tax basis. if the proceeds were to exceed your tax basis it would be taxable (just like life insurance). only the insurance company can tell you what your situation is.