Worker's Compensation

Similar to other personal injury settlements, a worker's compensation settlement is often best paid through a structured settlement plan. Since 1997, the tax law related to worker's compensation and structured settlements has allowed these payments to be income tax-free.

Setting up a worker's compensation structured settlement is fairly simple if the right professionals are involved. An employer or its insurance company contacts a structured settlement specialist who drafts a deal based on the particular situation, including the injured employee’s age, annual earnings at the time of injury, and projected medical costs. If both employer and employee agree to the deal, the specialist arranges the financing.

Being awarded a large sum of money can attract unsavory characters. These include “factoring companies”—not to be confused with legitimate structured settlement specialists. Factoring companies purchase payment streams from claimants in return for a lump sum payment that is typically a fraction of the value. These companies surfaced in the 1990s and originally purchased lottery winning payment streams. They have since turned focus to the courts and seek out worker's compensation and other personal injury settlement recipients.

Legislation in nearly half of the U.S. is being passed to limit the activities of and place severe restrictions on factoring companies; however it is not yet enough. Be wary of these types of solicitations, and feel free to contact us with questions about this or other aspects of a worker's compensation structured settlement.