Cancer Plans Payout Taxable?

[HealthGuy]

As a general rule (not looking for specific tax advice)...If a cancer policy (like the Humana supplemental cash cancer plan)..If such a policy is classified as a health insurance policy not a life policy as it is - is the cash payout typically then a taxable lump sum? I believe it is, but wanted a confirmation...I called Humana direct, they won't tell me because they "think they are giving me tax advice". I'm not looking for this, just a general tax rule in this case.

I know other CI policies, etc. that are classified as a "life insurance product" those cash payouts are typically not taxable.

Anybody want to chime in here?

 

[rousemark]

As a general rule (not looking for specific tax advice)...If a cancer policy (like the Humana supplemental cash cancer plan)..If such a policy is classified as a health insurance policy not a life policy as it is - is the cash payout typically then a taxable lump sum? I believe it is, but wanted a confirmation...I called Humana direct, they won't tell me because they "think they are giving me tax advice". I'm not looking for this, just a general tax rule in this case.

I know other CI policies, etc. that are classified as a "life insurance product" those cash payouts are typically not taxable.

Anybody want to chime in here?

Cancer insurance payouts are health insurance benefits and as a general rule are not taxable as long as the insured pays the premium.

If the employer pays the premium, then the benefits could be considered taxable. (up for debate)

 

[HealthGuy]

Got it since its a health policy its payout not taxable, thanks!

 

[Norwayguy]

To bad that they won't say if they send a 1099.

 

[rousemark]

To bad that they won't say if they send a 1099.

Have never had a company send out a 1099 for a cancer claim but there is a first time for everything.

 

[DHK]

Even if it was taxable... aren't medical expenses about 7.5% AGI tax-deductibe? Wouldn't that offset any taxable implications of receiving insurance benefits?

(I could be wrong on this, but I don't think I am.)

 

[somarco]

Cancer insurance payouts are health insurance benefits

is not the same as

since its a health policy its payout not taxable,

Accelerated death benefits are, in effect, health benefits but may be taxable in some situations.

The cancer policies I have seen are indeed health insurance policies. But several of the CI plans I have seen are riders to a life policy . . . . which effectively changes the way the IRS perceives it.

I suppose if the carrier does not generate a 1099 the IRS will never know.

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[rousemark]

is not the same as



Accelerated death benefits are, in effect, health benefits but may be taxable in some situations.

The cancer policies I have seen are indeed health insurance policies. But several of the CI plans I have seen are riders to a life policy . . . . which effectively changes the way the IRS perceives it.

I suppose if the carrier does not generate a 1099 the IRS will never know.

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Guess I wasn't very clear. I was addressing limited benefit cancer polices and not an accelerated benefit on a life policy which is an entirely different animal.

 

[somarco]

Not at all, just offering additional view points and embellishment.

Some life policies with LTCi benefits may also generate a taxable event.

Regardless, agents should be wary of offering what may be construed as legal or tax advice when presenting these plans.