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

Workers' compensation payments, including structured periodic payments, are excluded from gross income under IRC §104(a)(1), which specifically covers workers' compensation acts.

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

Under the Longshore and Harbor Workers' Compensation Act (LHWCA), Section 32 allows parties to settle claims with Department of Labor approval, often resulting in a structured settlement.

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 WCMSA allocates part of the WC settlement to cover future medical costs that Medicare would otherwise pay, protecting Medicare's secondary payer interests.

Question 4

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

Accepted Answer

Centers for Medicare & Medicaid Services (CMS)

Answer

CMS reviews WCMSA proposals when they meet certain review thresholds to ensure that the set-aside adequately protects Medicare's interests before approving the settlement.

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' compensation structured settlements must comply with state WC statutes and typically require approval from a WC judge or board, whereas tort structured settlements are governed by civil procedure and contract law.

Structured Settlements Practice Test

Structured Settlements Practice Test

Structured Settlements Workers' Compensation Structured Settlements