Structured Settlements Workers' Compensation Structured Settlements

Question 1

Under which IRC section are workers' compensation periodic payments excluded from federal income tax?

Accepted Answer

IRC §104(a)(1)

Answer

IRC §104(a)(2)

Answer

IRC §130

Answer

IRC §72(e)

Question 2

What is a 'Section 32 waiver' in the context of federal workers' compensation?

Accepted Answer

A settlement of a federal workers' compensation claim under the LHWCA or FECA, approved by the Department of Labor

Answer

An IRS waiver allowing taxable workers' comp payments

Answer

A waiver of the court approval requirement for structured settlements

Answer

A Medicare waiver allowing workers to keep settlement funds

Question 3

What is a 'workers' compensation Medicare Set-Aside' (WCMSA)?

Accepted Answer

A portion of a workers' compensation settlement set aside to pay for future Medicare-covered medical expenses related to the work injury

Answer

A retirement account funded by workers' compensation benefits

Answer

A mandatory insurance policy for employers

Answer

A state fund that pays workers' comp claims when an employer is uninsured

Question 4

Which federal agency reviews Workers' Compensation Medicare Set-Aside proposals?

Accepted Answer

Centers for Medicare & Medicaid Services (CMS)

Answer

IRS

Answer

Social Security Administration (SSA)

Answer

Department of Labor (DOL)

Question 5

What is the primary difference between a workers' compensation structured settlement and a tort (liability) structured settlement?

Accepted Answer

Workers' comp settlements are governed by state WC statutes and often require administrative approval, while tort settlements are governed by civil law and may require court approval

Answer

Workers' comp settlements are taxable; tort settlements are tax-free

Answer

Tort settlements cannot include medical payments; WC settlements can

Answer

Workers' comp annuities cannot include COLA provisions

Question 6

Can a workers' compensation structured settlement include a Medicare Set-Aside that is itself structured as periodic payments?

Accepted Answer

Yes — a WCMSA can be funded as an annuity providing periodic payments into the set-aside account

Answer

No — MSAs must always be fully funded upfront in a lump sum

Answer

Only if approved by the IRS

Answer

Only if the claimant is already on Medicare