Why consider a structured settlement? A structured settlement gives an injured worker the unique ability to design payments tailored for his or her long term needs. Structured settlement payments can accommodate family needs, such as a child’s education. Or, it can be an important role in helping parties to come to an agreed settlement of a workers compensation claims. In 1997, the US Congress amended the Federal Tax Code to encourage the use of structured settlements in workers compensation claims. A structured settlement can provide an injured worker with steady tax free income and future financial security.
The Issue: The workers compensation system is a limited solution
Typically, in Virginia, an injured worker gets a weekly lost wage benefit check in addition to medical treatment. But, some medical treatment can be denied even if recommended by the injured worker’s doctor. Also, if/when the injured worker dies, all benefits usually end with nothing payable to family members.
The Solution: Tailored tax free income from a structured settlement
With a flexible and secure payment stream, a structured settlement offers several advantages including the ability to diversify a settlement with cash and tax free income. With multiple payment options, your settlement design can address future income and medical needs more effectively than might be possible with just a single cash only lump sum payment to the injured worker.
Resolving permanency and death claims
When workers compensation cases involve death or permanent disability, the security of a structured settlement can bring significant long term financial advantages. In both of these situations, structured payments can be guaranteed for an injured worker’s life and even their spouse’s life. That can be a major benefit over other payment options which stop immediately upon an injured worker’s death.
Are you a Medicare beneficiary?
When settling your workers compensation claim, medical treatment may continue to be a priority. If you are a Medicare beneficiary, the Centers for Medicare and Medicaid Services (CMS) will review your settlement to be sure future Medicare covered expenses are appropriately included in your settlement. This is often done through a Medicare Set Aside (MSA) account.
This allocation is important for two reasons. First, it is a necessary step toward compliance with the Federal law that protects the Medicare system for beneficiaries like you. Second, a CMS review and approval of the MSA protects you if the amount of money that’s been allocated for those expenses falls short due to a change in your medical condition. In this instance, Medicare would step in and pay for those work related injury expenses covered by Medicare, bringing you peace of mind.
Funding your MSA with a structured settlement is permitted by CMS and offers security that you will always have access to medical care.
When making the decision to settle your workers compensation claim, it’s important to do so in a way that provides future income that will address your needs and goals without sacrificing financial security. A structured settlement can be an option.
If you are settling your workers compensation claim or if you would like more information on the Virginia workers compensation system, order my book, “The Ultimate Guide to Workers’ Compensation in Virginia” by clicking this link, or call our office today (804) 755-7755.