Workers Comp Settlements – The Benefits of a Structured Settlement

structured settlement workers comp

If you have been injured and you have a workers’ compensation claim, you may be eligible to receive a structured settlement.

A structured settlement is a form of settlement where future periodic payments are made instead of one lump sum payment up front.

Structured settlements can be tailored to fit your unique needs and can pay you for a wide range of expenses. They can also help you save money on taxes.


Rather than a single check, workers comp claimants who receive structured settlements are offered periodic payments that may last for decades or more. In addition, these settlements provide the flexibility to tailor payments based on current and future costs of living.

A structured settlement can also help injured workers manage their money and avoid the temptation to spend it all on large purchases. These benefits are especially important when a claimant has a long-term medical condition or a chronic illness that will require ongoing care.

In addition, settlements can be tailored to pay for exceptional costs such as college tuition or a child’s education. This helps the claimant avoid having to resort to private insurance or a supplemental payment when necessary.

These types of settlements offer significant tax advantages. Unlike the earnings on traditional investments, such as stocks and bonds, the growth of a structured settlement is not subject to income taxes.

Another benefit of structured settlements is that the money is not effected by fluctuations in the financial market. This makes them ideal for those who want to protect their assets against the unpredictable economy.

One of the biggest advantages is that these settlements do not count against the income required to qualify for government benefits such as Medicare or Medicaid. This can be a major issue for many people who receive a lump sum settlement and would like to maintain their eligibility for those programs.

Additionally, these types of settlements can be set up to take inflation into account and increase the payments at certain times. This is useful for those who are planning to retire in the near future and need to have a reliable source of income to cover health-care expenses.

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Finally, a structured settlement can be used to fund a Medicare Set-Aside (MSA) account that provides for the cost of a claimant’s future medical treatment. This is particularly useful for those who are retraining or planning to work part-time in a different occupation.

The benefits of structured settlements are numerous, and they can be used to maximize the compensation an injured worker receives in a wrongful death or workers compensation case. In some cases, a structured settlement can even help a claimant to resolve a claim more quickly.


If you are involved in a workers’ compensation claim, it is important to understand the tax implications associated with a structured settlement. While the majority of workers’ comp payments are exempt from federal taxes, it is possible for a portion of your benefits to be taxable. This is a rare situation, and it will be necessary to work with an experienced workers’ comp attorney in order to minimize or eliminate your taxable income.

First, if you receive a lump sum payout from a workers’ comp settlement, the funds are subject to federal income taxes. If the proceeds are placed in the stock market, you will likely owe taxes on any dividends or interest earned.

Second, structured settlements are more appealing than lump sum payouts because they give you the flexibility to receive periodic payments over a long period of time. This means that you can pay for immediate needs while also planning for future expenses.

Additionally, the payments from a structured settlement can be scheduled for life with a guaranteed minimum number of years, allowing for a designated beneficiary to receive the remainder if you pass away before that amount is reached. The remaining amount can be used for other purposes, such as family needs.

Another benefit of structured settlements is that they are backed by highly-regulated insurance companies, which make the payments to the injured party. This means that the funds are not in danger of disappearing from the account if the investment market collapses or an insurer is bankrupt.

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Finally, structured settlements are usually tax-free for the life of the claimant because they are based on annuities issued by life insurance companies. These companies are highly regulated and have financial strength that is independent of the annuity’s underlying performance.

The tax advantages of structured settlements are significant. In addition to being a tax-free option, they provide higher returns than traditional investments. This is because they are not based on the stock market or the bond market, which can fluctuate in value. Moreover, they are not subject to fees or management costs. This provides injured workers with peace of mind knowing that their money is safe and will be able to grow over time.


The right structured settlement can help an injured worker and his or her family recoup lost wages, cover medical costs and even prepare for retirement. A structured settlement is not for the faint of heart, so be sure to consult an experienced workers comp attorney before making any financial decisions. Structured settlements can be tailored to fit your specific needs and budget. Using the right type of insurance can help you reap the benefits of your settlement sooner and more efficiently than you would on your own. For example, if your employer has no insurance and you have been injured on the job, you are likely eligible for workers compensation, a disability income program (NIP), and perhaps Medicare or Medicaid, which will all pay a portion of your medical bills. If you have a self-insured company, your best bet is to discuss your options with your HR department. You may be pleasantly surprised at the amount of money that your company is willing to pay you to settle your case.


A structured settlement can be an excellent option for those who need more flexibility than the typical monthly workers comp payments. For instance, if you have a large medical bill or you cannot return to work right away, structured settlements can provide you with money that comes in over time rather than in one lump sum payment.

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Another reason why a structured settlement is often a good option for injured workers is that the periodic payments are tax-free*. This benefit is important to many injured workers because it can help them avoid paying income taxes on their future earnings.

However, not all injured workers are eligible to receive a structured settlement. If you’re unsure if you qualify, it’s best to consult with an experienced attorney who can help you decide if a structured settlement is the right option for your situation.

Structured settlements are beneficial for any type of case where the payout will be received over a long period of time. This is particularly true in cases involving permanent injuries or in those that require frequent medical checkups.

The benefits of a structured settlement can also be valuable for those who need a larger amount of money than is available through L&I benefits, or for those who may have financial concerns that would make it difficult to manage the payouts. If you have a spouse or child who has died due to a workplace injury, for example, a structured settlement can be a great way to replace their income and cover their everyday expenses while they’re still alive.

Finally, a structured settlement can be an attractive option for those who have other sources of income that are not covered by L&I, such as Social Security or a union pension. These funds can be invested into an annuity or trust so that you have access to a large amount of cash when it is needed, instead of having the funds tied down in a traditional workers’ compensation settlement.

While a structured settlement is often an excellent option for injured workers, it’s important to discuss your options with an attorney who can help you determine whether it’s the best solution for your situation. It’s also important to remember that while a structured settlement can be a great option for you, it can be difficult to modify or cancel your agreement once it’s been reached.

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