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                                 Exhibit 10.47





                        PENN TREATY AMERICAN CORPORATION
                         1998 EMPLOYEE STOCK OPTION PLAN


                                    ARTICLE I

                                     Purpose

     The purpose of the 1998 Employee Stock Option Plan (the "Plan") is to
enable Penn Treaty American Corporation (the "Company") to offer its officers,
directors and employees of the Company and its Subsidiaries options to acquire
equity interests in the Company, thereby attracting, retaining and rewarding
such persons, and strengthening the mutuality of interests between such persons
and the Company's shareholders.


                                   ARTICLE II

                                   Definitions

     For purposes of the Plan, the following terms shall have the following
meanings:

     2..1 "Award" shall mean an award under the Plan of a Stock Option.

     2..1 "Board" shall mean the Board of Directors of the Company.

     2..2 "Code" shall mean the Internal Revenue Code of 1986, as amended.

     2..3 "Committee" shall mean the Compensation Committee of the Board,
consisting of two or more members of the Board.

     2..4 "Common Stock" shall mean the Common Stock, par value $.10 per share,
of the Company.

     2..5 "Disability" shall mean a disability that results in a Participant's
Termination of Employment with the Company or a Subsidiary, as determined
pursuant to standard Company procedures.

     2..6 "Fair Market Value" for purposes of the Plan, unless otherwise
required by any applicable provision of the Code or any 



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regulations issued thereunder, shall mean, as of any date, the average of the
high and low sales prices of a share of Common Stock as reported on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading, or, if not listed or traded on any such exchange, The
Nasdaq Stock Market ("NASDAQ"), or, if such sales prices are not available, the
average of the bid and asked prices per share reported on NASDAQ, or, if such
quotations are not available, the fair market value as determined by the Board,
which determination shall be conclusive.

     2..7 "Incentive Stock Option" shall mean any Stock Option awarded under the
Plan intended to be and designated as an "Incentive Stock Option" within the
meaning of Section 422 of the Code.

     2..8 "Non-Qualified Stock Option" shall mean any Stock Option granted under
the Plan that is not an Incentive Stock Option.

     2..9 "Participant" shall mean an employee to whom an Award has been
granted.

     2..10 "Stock Option" or "Option" shall mean any option to purchase shares
of Common Stock granted pursuant to Article VI of the Plan.

     2..11 "Subsidiary" shall mean any subsidiary of the Company, 80% or more of
the voting stock of which is owned, directly or indirectly, by the Company.

     2..12 "Termination of Employment" shall mean a termination of employment
with the Company and all of its Subsidiaries. Whether authorized leave of
absence or absence for military or governmental service shall constitute
termination of employment, for the purposes of the Plan, shall be determined by
the Committee, which determination shall be final and conclusive.


                                   ARTICLE III

                                 Administration

     3..1 The Committee. The Plan shall be administered and interpreted by the
Committee.

     3..2 Awards. The Committee shall have full authority to grant, pursuant to
the terms of the Plan, Stock Options to persons eligible under Article V. In
particular, the Committee shall have the authority:


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          (a) to select the persons to whom Stock Options may from time to time
be granted;

          (b) to determine whether and to what extent Incentive Stock Options
and Non-Qualified Stock Options, or any combination thereof, are to be granted
to one or more persons eligible to receive Awards under Article V;

          (c) to determine the number of shares of Common Stock to be covered by
each Award granted hereunder; and

          (d) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any Award granted hereunder (including, but not limited
to, the option price, the option term, and provisions relating to any
restriction or limitation, any vesting schedule or acceleration, or any waiver
with respect to the Award).

     3..3 Guidelines. Subject to Article VII hereof, the Committee shall have
the authority to adopt, alter and repeal such administrative rules, guidelines
and practices governing the Plan as it shall, from time to time, deem advisable;
to interpret the terms and provisions of the Plan and any Award granted under
the Plan (and any agreements relating thereto); and to otherwise supervise the
administration of the Plan. The Committee may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or in any Award in the
manner and to the extent it shall deem necessary to carry the Plan into effect.
Notwithstanding the foregoing, no action of the Committee under this Section 3.3
shall impair the rights of any Participant without the Participant's consent,
unless otherwise required by law.

     3..4 Decisions Final. Any decision, interpretation or other action made or
taken in good faith by the Committee arising out of or in connection with the
Plan shall be final, binding and conclusive on the Company, all Participants and
their respective heirs, executors, administrators, successors and assigns.


                                   ARTICLE IV

                                Share Limitation

     4..1 Shares. The maximum aggregate number of shares of Common Stock that
may be issued under the Plan is 600,000 (subject to any increase or decrease
pursuant to Section 4.3), which may be either 


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authorized and unissued shares of Common Stock or issued Common Stock reacquired
by the Company. If any Option granted under the Plan shall expire, terminate or
be canceled for any reason without having been exercised in full, the number of
unpurchased shares shall again be available for the purposes of the Plan.

     4..2 Individual Limit. No employee may be granted Awards covering more than
100,000 shares of Common Stock (subject to increase or decrease pursuant to
Section 4.3) during any calendar year.

     4..3 Changes.

          (a) The number of shares of Common Stock covered by each outstanding
Stock Option, and the exercise price per share in each such Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock of the Company resulting from a subdivision or
consolidation of shares or the payment of a stock dividend (but only on the
Common Stock) or any other increase or decrease in the number of such shares
effected without receipt of consideration by the Company.

          (b) If the Company shall be the surviving corporation in any merger or
consolidation, each outstanding Stock Option shall pertain to and apply to the
securities to which a holder of the number of shares of Common Stock subject to
the Stock Option would have been entitled. A dissolution or liquidation of the
Company or a merger or consolidation in which the Company is not the surviving
corporation, shall cause each outstanding Stock Option to terminate, provided
that each optionee shall, in such event, if a period of 12 months from the date
of the granting of the Stock Option shall have expired, have the right
immediately prior to such dissolution or liquidation, or merger or consolidation
in which the Company is not the surviving corporation, to exercise his Stock
Option in whole or in part without regard to the installment provisions of
Section 6.4(d) of the Plan. Notwithstanding the above provisions upon a merger
or consolidation, a Stock Option will not terminate if assumed by the surviving
or acquiring corporation, or its parent, and in the case of an Incentive Stock
Option the circumstances of such assumption are not deemed a modification of the
Incentive Stock Option within the meaning of Sections 424(a) and 424(h)(3)(A) of
the Code.

          (c) In the event of a change in the Common Stock of the Company as
presently constituted, which is limited to a change of all of its authorized
shares with par value into the same number of shares with a different par value
or without par value, the shares resulting from any such change shall be deemed
to be the Common Stock within the meaning of the Plan.



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          (d) To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Committee,
whose determination in that respect shall be final, binding and conclusive,
provided that no Incentive Stock Option granted pursuant to the Plan shall be
adjusted in a manner that causes the Incentive Stock Option to fail to continue
to qualify as an incentive stock option within the meaning of Section 422 of the
Code.

          (e) The grant of a Stock Option pursuant to the Plan shall not affect
in any way the right or power of the Company to make adjustments,
reclassification, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve, liquidate or sell, or
transfer all or any part of its business or assets.

                                    ARTICLE V

                                   Eligibility

All officers, directors and employees of the Company and its Subsidiaries are
eligible to be granted Stock Options under the Plan.

                                   ARTICLE VI

                                  Stock Options

     6..1 Options. Each Stock Option granted under the Plan shall be either an
Incentive Stock Option or a Non-Qualified Stock Option.

     6..2 Grants. The Committee shall have the authority to grant to any person
eligible under Article V one or more Incentive Stock Options, Non-Qualified
Stock Options, or both types of Stock Options. To the extent that any Stock
Option does not qualify as an Incentive Stock Option (whether because of its
provisions or the time or manner of its exercise or otherwise), such Stock
Option or the portion thereof which does not qualify as an Incentive Stock
Option shall constitute a separate Non-Qualified Stock Option.

     6..3 Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term of the Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be exercised, so as to disqualify the Plan under Section
422 of the Code, or, without the consent of the Participants affected, to
disqualify any Incentive Stock Option under such Section 422.



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     6..4 Terms of Options. Options granted under the Plan shall be subject to
the following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Committee shall
deem desirable:

          (a) Notice of Grant of Stock Option. Each Stock Option shall be
evidenced by, and subject to the terms of, a Notice of Grant of Stock Option
executed by the Company and the Participant. The Notice of Grant of Stock Option
shall specify whether the Option is an Incentive Stock Option or a Non-Qualified
Stock Option, the number of shares of Common Stock subject to the Stock Option,
the option price, the option term, and the other terms and conditions applicable
to the Stock Option.

          (b) Option Price. The option price per share of Common Stock
purchasable upon exercise of a Stock Option shall be determined by the Committee
at the time of grant, but shall be not less than 100% of the Fair Market Value
of the Common Stock on the date of grant if the Stock Option is intended to be
an Incentive Stock Option. The Committee may, in its discretion, grant
Non-Qualified Stock Options at an option price per share which is below the Fair
Market Value of the Common Stock on the date of grant.

          (c) Option Term. The term of each Stock Option shall be fixed by the
Committee at the time of grant, but no Stock Option shall be exercisable more
than ten years after the date it is granted.

          (d) Exercisability. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Committee at the time of grant; provided, however, that no Stock Option shall be
exercisable in whole or in part prior to 12 months from the date it is granted;
and provided further, that the Committee may waive any installment exercise or
waiting period provisions, in whole or in part, at any time after the date of
grant, based on such factors as the Committee shall deem appropriate in its sole
discretion.

          (e) Method of Exercise. Subject to such installment exercise and
waiting period provisions as may be imposed by the Committee, Stock Options may
be exercised in whole or in part at any time during the option term by
delivering to the Company written notice of exercise specifying the number of
shares of Common Stock to be purchased and the option price therefor; provided,
however, that not less than 50 shares may be purchased at any one time unless
the number purchased is the total number at the time purchasable under the Stock
Option. The notice of exercise shall be accompanied by payment 


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in full of the option price and, if requested, by the representation described
in Section 9.2. Payment of the option price may be made (i) in cash or by check
payable to the Company, (ii) to the extent determined by the Committee on or
after the date of grant, in shares of Common Stock duly owned by the Participant
(and for which the Participant has good title free and clear of any liens and
encumbrances) or (iii) by reduction in the number of shares of Common Stock
issuable upon such exercise, based, in each case, on the Fair Market Value of
the Common Stock on the date of exercise. In addition, the Committee shall have
the discretion to include in any Option grant the right of the Participant (A)
to receive a loan from the Company to pay the exercise price of the Stock
Option, with such terms as shall not cause the Stock Option, if an Incentive
Stock Option, to become disqualified under Section 422 of the Code or amendments
thereto, and/or (B) to receive such assistance from the Company in obtaining a
loan from a financial institution as is necessary in the sole discretion of the
Committee. Upon payment in full of the option price and satisfaction of the
other conditions provided herein, a stock certificate representing the number of
shares of Common Stock to which the Participant is entitled shall be issued and
delivered to the Participant.

          (f) Death. In the event of a Participant's Termination of Employment
by reason of death, any Stock Option held by such Participant which was
exercisable on the date of death may thereafter be exercised by the legal
representative of the Participant's estate until the earlier of twelve months
after the date of death or the expiration of the stated term of such Stock
Option, and any Stock Option not exercisable on the date of death shall be
forfeited.

          (g) Disability. In the event of a Participant's Termination of
Employment by reason of Disability, any Stock Option held by such Participant
which was exercisable on the date of such Termination of Employment may
thereafter be exercised by the Participant until the earlier of twelve months
after such date or the expiration of the stated term of such Stock Option, and
any Stock Option not exercisable on the date of such Termination of Employment
shall be forfeited. If an Incentive Stock Option is exercised after the
expiration of the exercise period that applies for purposes of Section 422 of
the Code, such Stock Option will thereafter be treated as a Non-Qualified Stock
Option.

          (h) Termination of Employment. Unless otherwise determined by the
Committee on or after the date of grant, in the event of a Participant's
Termination of Employment other than by reason of Death or Disability, all Stock
Options held by such 


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Participant on the date of such Termination of Employment shall be forfeited as
of such date.

          (i) Non-Transferability of Options. No Stock Option shall be
transferrable by the Participant otherwise than by will or by the laws of
descent and distribution, to the extent consistent with the terms of the Plan
and the Option, and all Stock Options shall be exercisable, during the
Participant's lifetime, only by the Participant.

          (j) Incentive Stock Option Limitations. To the extent that the
aggregate Fair Market Value (determined as of the date of grant) of the Common
Stock with respect to which Incentive Stock Options are exercisable for the
first time by the Participant during any calendar year under the Plan and/or any
other stock option plan of the Company or any subsidiary or parent corporation
(within the meaning of Section 424 of the Code) exceeds $100,000, such Options
shall be treated as Options which are not Incentive Stock Options.

          Should the foregoing provisions not be necessary in order for the
Stock Options to qualify as Incentive Stock Options, or should any additional
provisions be required, the Committee may amend the Plan accordingly, without
the necessity of obtaining the approval of the shareholders of the Company.

          (k) Ten-Percent Shareholder Rule. Notwithstanding any other provision
of the Plan to the contrary, no Incentive Stock Option shall be granted to any
person who, immediately prior to the grant, owns stock possessing more than ten
percent of the total combined voting power of all classes of stock of the
Company or any subsidiary or parent corporation (within the meaning of Section
424 of the Code), unless the option price is at least 110% of the Fair Market
Value of the Common Stock on the date of grant and the Option, by its terms,
expires no later than five years after the date of grant.

     6..5 Rights as Shareholder. A Participant shall not be deemed to be the
holder of Common Stock, or to have any of the rights of a holder of Common
Stock, with respect to shares subject to the Option, unless and until the Option
is exercised and a stock certificate representing such shares of Common Stock is
issued to the Participant.

                                   ARTICLE VII




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                            Termination or Amendment

     7..1 Termination or Amendment of Plan. The Committee may at any time amend,
discontinue or terminate the Plan or any part thereof (including any amendment
deemed necessary to ensure that the Company may comply with any regulatory
requirement referred to in Article IX); provided, however, that, unless
otherwise required by law, the rights of a Participant with respect to Awards
granted prior to such amendment, discontinuance or termination may not be
impaired without the consent of such Participant and, provided further that, the
Company will seek the approval of the Company's shareholders for any amendment
if such approval is necessary to comply with the Code, Federal or state
securities law or any other applicable rules or regulations.

     7..2 Amendment of Options. The Committee may amend the terms of any Award
previously granted,prospectively or retroactively, but, subject to Article IV,
no such amendment or other action by the Committee shall impair the rights of
any holder without the holder's consent.


                                  ARTICLE VIII

                                  Unfunded Plan

     The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payment not yet made to a Participant by the
Company, nothing contained herein shall give any such Participant any rights
that are greater than those of a general creditor of the Company.


                                   ARTICLE IX

                               General Provisions

     9..1 Nonassignment. Except as otherwise provided in the Plan, any Award
granted hereunder and the rights and privileges conferred thereby shall not be
sold, transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise), and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of an Award, right or privilege contrary to the
provisions hereof, or upon the levy of any attachment or similar process
thereon, such Award and the rights and privileges conferred 


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hereby shall immediately terminate and the Award shall immediately be forfeited
to the Company.

     9..2 Legend. The Committee may require each person acquiring shares upon
exercise of a Stock Option to represent to the Company in writing that the
Participant is acquiring the shares without a view to distribution thereof. The
stock certificates representing such shares may include any legend which the
Committee deems appropriate to reflect any restrictions on transfer.

     All certificates representing shares of Common Stock delivered under the
Plan shall be subject to such stock transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange or
stock market upon which the Common Stock is then listed or traded, any
applicable Federal or state securities law, and any applicable corporate law,
and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.

     9..3 Other Plans. Nothing contained in the Plan shall prevent the Board
from adopting other or additional compensation arrangements, subject to
shareholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases.

     9..4 No Right to Employment. Neither the Plan nor the grant of any Award
hereunder shall give any Participant or other employee any right with respect to
continuance of employment by the Company or any Subsidiary, nor shall the Plan
impose any limitation on the right of the Company or any Subsidiary by which a
Participant is employed to terminate such Participant's employment at any time.

     9..5 Withholding of Taxes. The Company shall have the right to reduce the
number of shares of Common Stock otherwise deliverable pursuant to the Plan by
an amount that would have a Fair Market Value equal to the amount of all
Federal, state and local taxes required to be withheld, or to deduct the amount
of such taxes from any cash payment otherwise to be made to the Participant. In
connection with such withholding, the Committee may make such arrangements as
are consistent with the Plan as it may deem appropriate.

     9..6 Listing and Other Conditions.

          (a) If the Common Stock is listed on a national securities exchange or
The Nasdaq Stock Market, the issuance of any 



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shares of Common Stock pursuant to an Award shall be conditioned upon such
shares being listed on such exchange or NASDAQ. The Company shall have no
obligation to issue any shares of Common Stock unless and until such shares are
so listed, and the right to exercise any Option shall be suspended until such
listing has been effected.

          (b) If at any time counsel to the Company shall be of the opinion that
any sale or delivery of shares of Common Stock upon exercise of a Stock Option
is or may in the circumstances be unlawful or result in the imposition of excise
taxes under the statutes, rules or regulations of any applicable jurisdiction,
the Company shall have no obligation to make such sale or delivery, or to make
any application or to effect or to maintain any qualification or registration
under the Securities Act of 1933, as amended, or otherwise with respect to
shares of Common Stock or Awards, and the right to exercise any Option shall be
suspended until, in the opinion of such counsel, such sale or delivery shall be
lawful or shall not result in the imposition of excise taxes.

          (c) Upon termination of any period of suspension under this Section
9.6, any Award affected by such suspension which shall not then have expired or
terminated shall be reinstated as to all shares available before such suspension
and as to shares which would otherwise have become available during the period
of such suspension, but no such suspension shall extend the term of any Option.

     9..7 Governing Law. The Plan and actions taken in connection herewith shall
be governed and construed in accordance with the laws of the Commonwealth of
Pennsylvania.

     9..8 Construction. Wherever any words are used in the Plan in the masculine
gender they shall be construed as though they were also used in the feminine
gender in all cases where they would so apply, and wherever any words are used
herein in the singular form they shall be construed as though they were also
used in the plural form in all cases where they would so apply.

     9..9 Liability of the Board and the Committee. No member of the Board or
the Committee nor any employee of the Company or any of its subsidiaries shall
be liable for any act or action hereunder, whether of omission or commission, by
any other member or employee or by any agent to whom duties in connection with
the administration of the Plan have been delegated or, except in circumstances
involving bad faith, gross negligence or fraud, for anything done or omitted to
be done by himself.




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     9..10 Other Benefits. No payment pursuant to an Award shall be deemed
compensation for purposes of computing benefits under any retirement plan of the
Company or any Subsidiary nor affect any benefits under any other benefit plan
now or hereafter in effect under which the availability or amount of benefits is
related to the level of compensation.

     9..11 Costs. The Company shall bear all expenses incurred in administering
the Plan, including expenses related to the issuance of Common Stock upon
exercise of Stock Options.

     9..12 Severability. If any part of the Plan shall be determined to be
invalid or void in any respect, such determination shall not affect, impair,
invalidate or nullify the remaining provisions of the Plan which shall continue
in full force and effect.

     9..13 Successors. The Plan shall be binding upon and inure to the benefit
of any successor or successors of the Company.

     9..14 Headings. Article and section headings contained in the Plan are
included for convenience only and are not to be used in construing or
interpreting the Plan.


                                    ARTICLE X

                                  Term of Plan

     10..1 Effective Date. The Plan shall be effective as of the date of its
approval by the Company's shareholders.

     10..2 Termination Date. Unless sooner terminated, the Plan shall terminate
ten years after it is adopted by the Board and no Awards may be granted
thereafter. Termination of the Plan shall not affect Awards granted before such
date.






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