What Goods and Services Are Eligible for Special Needs Trust Distributions?
May 11, 2017Can A Structured Settlement Benefit Claimants of All Ages?
May 30, 2017
If you have ever been injured on the job, you know how overwhelming it feels to try and replace your income while you and your family try to adjust to a new normal. Workers’ compensation rules vary by state and often provide only limited assistance for the injured individual. Structured settlements, on the other hand, can offer a viable solution for settling workers’ compensation claims and creating a steady source of future income.
Potential Issues When Solving a Workers’ Comp Case
State workers’ compensation systems generally make bi-weekly or monthly benefit payments while also providing medical treatment. Unfortunately, some medical care can be denied, even if the injured individual’s doctor deems the treatment necessary. Also, upon the death of the injured individual, all workers’ compensation benefits typically end and the family receives no further funds.
Structured Settlements: A Tool for Resolution
A structured settlement annuity can be designed to meet the needs of the individual worker and their family. Payments can be made monthly, bi-annually, annually, or in the form of future lump sums to pay for anticipated expenses such as college or retirement. Payments are 100% income tax-free, including any interest growth on the annuity, and the rate of return is guaranteed1, regardless of whether the market is up or down. Structured settlement payments can also be guaranteed for the injured individual’s lifetime and the spouse’s lifetime, in the event that the injured individual dies.
Using Structured Settlements for Workers’ Compensation Medicare Set-Asides
For individuals who are Medicare beneficiaries, extra attention needs to be paid to any settlement funds reserved for Medicare-covered expenses. By law, Medicare acts as the secondary payer to funds from a workers’ compensation settlement, so proceeds from the settlement must be used to pay for the medical expenses that would otherwise be covered by Medicare.
To fund a Medicare Set-Aside, the injured individual can either use cash or a structured settlement annuity. A structured settlement annuity offers some advantages over funding with cash. Here’s how it works:
- An initial deposit (“seed money”) covers the first surgical procedure or replacement and two years of annual payments
- The structured annuity then funds the MSA with annual deposits
- During a single year, if the funds in the MSA are not exhausted, they are carried forward to the next period and added to the next annual deposit
If the funds in the MSA are exhausted within a given annual period, Medicare will pay the claims-related expenses for the remainder of that period. If the MSA is funded with cash, the entire MSA must be exhausted before Medicare will resume as the primary payer.
Contact Us Today
Traci Kaas helps injured workers create financial solutions to meet their needs. For questions about your workers’ compensation case, contact us today at 800-354-2258 or info@tracikaas.com.
1Guarantees are subject to the claims-paying abilities of the issuing insurance agency.