Structured Settlements in Workers’ Compensation

Self-insured employers often question how to resolve their high value and difficult to conclude claims. The financial expectations and medical needs of the injured employees create complicated issues preventing a claim settlement. Structured settlements can often be the bridge to achieving a settlement when the injured employee will have on-going financial and medical needs.

We have received many questions about the benefits of structured settlements and how to achieve a structured settlement.  Here are the most frequently asked questions about structured settlements.

















Q. Exactly what is a structured settlement?
A. A structured settlement is financial agreement for a series of periodic payments an injured person receives over a set time period, or over the person’s life time, to settle any legal obligation, including a workers’ compensation claim.

Q. Are all payments the same?
A. All payments can be the same, but often are flexible and will vary to meet the financial needs of the injured employee. For instance, in addition to biweekly or monthly payments to cover the employee’s on-going loss of income, an initial lump sum to cover transportation or housing needs can be included in the structured settlements. Other variations from the biweekly or monthly payment can be included, for example a future sum for the college tuition of the employee’s child.

Q. What about inflation? How does the structured settlement handle the future decline in purchasing power?
A. The structure settlement can be structured to increase the periodic payment amounts by a fixed amount on a fixed date(s) in the future.

Q. Workers’ compensation indemnity payments are “tax free”. Will the injured employee have to pay income taxes on the periodic payments?
A. No. Under the provisions of the Internal Revenue Code Section 104(a)(1), the periodic payments of a structured settlement are income tax free.

Q. Why would an employer obligate itself to a set of periodic payments that could last for many years into the future?
A. The employer purchases a fixed annuity from a life insurance company to fund the future periodic payments. The life insurance company assumes the responsibility of making all future payments. The employer obligation to make the payments is transferred to the life insurer eliminating the employer’s need to set aside any future reserves for the workers’ compensation claim.




Q. What type of workers’ compensation claims benefit from the use of a structured settlement?

A. An employer can reduce their long-term financial exposure on any serious or catastrophic injury claim with a structured settlement. Examples of cases that often involve a structured settlement include:

    Brain/brain stem injuries
    Spinal cord injuries
    Amputations
    Severe burns
    Multiple trauma claims
    Vision loss
    Hearing loss
    Occupational lung diseases
    Any type of injury that leaves the employee permanently and totally disabled or disabled to the point the employee is unable to return to meaningful employment.


Q. How do structured settlements account for the medical expenses of an injured employee that could last a life time?
A. A separate medical account is set up to cover the employee’s future medical expenses as established by medical actuary. A third party professional administration company oversees the payment of future medical expenses from the account.


Q. What about an injured employee who is eligible for Medicare and/or Social Security Disability? How does a structured settlement handle the requirements for a Medicare Set-Aside (MSA) arrangement?
A. A structured settlement is highly beneficial for a MSA. A structured settlement for the MSA benefits the employer as it costs less because the MSA benefits from the time value of money. Instead of the third party professional administration company receiving all of the money for the MSA up front, the structured settlement insurer funds the MSA periodically as needed.


Q. What information is needed by the structured settlement company before they can quote the cost of the structured settlement?
A. There are several factors that come into play in calculating the cost of the structured settlement including the injured employee’s age, the expected life expectancy of the injured employee, the anticipated cost of future medical care and the employee’s need for lump sum payments both at the start of the structured settlement and at future specific dates.


Q. How can the employer know the life insurance company will be able to make the periodic payments twenty, thirty or forty years in the future?
A. The employer can check the life insurer’s financial strength through the service of A.M. Best, an independent evaluator of the financial strength of insurance companies. We recommend the use of an insurer rated A, or higher, by A. M. Best.


Q. What benefits does a structured settlement provide to the injured employee?
A. There are many benefits to the injured employee, including:

    The structured settlement eliminates many of the financial concerns of the employee by allowing the employee to know what his/her future income will be.

    The employee can receive payments both for immediate needs and periodic payments timed to meet future anticipated needs.

    The employee does not have to worry about managing a large amount of money or fluctuations in the equity market or bond market.

    The employee is provided is a provided a good fixed rate of return on the money invested in the structured settlement.

    In most cases, the structured settlement provides the employee with more money over the long term than a lump sum settlement paid direct to the employee.

    The employee/employee’s attorney no longer has to interact with the employer where the relationship may have become strained, but instead will interact with the life insurer who provides the structured settlement.

    Also, if the employee invests a lump settlement on their own, the employee will be responsible for income taxes on the interest, capital gains or dividends earned by their investment.


Q. Are there any other reasons the injured employee would want a structured settlement?
A. There are several reasons an employee would prefer a structured settlement over the benefits provided by the workers’ compensation system. Structured settlements give the employee freedom from the restraints of workers’ compensation.

The workers’ compensation payments have a time limit in many states (often 400 weeks or 500 weeks) after which the payments cease.

Statutory payments in death claims normally cease upon remarriage.

Workers’ compensation indemnity payments can end if the employee is retrained for another job and returns to work in another field.


Q. The employee is represented by an attorney. How are the plaintiff attorney fees handled?
A. The plaintiff attorney fee can be paid as a lump sum settlement or the attorney fees can also be set-up in a structured settlement providing the attorney with a guaranteed source of future income.


Q. The closure of the claim through a structured settlement is the major benefit to the employer. Are there other benefits to the employer?
A. Yes. A structured settlement can avoid the uncertainty of litigation and end the on-going legal expense. In life time disability claims, the mortality risk and the investment risk is transferred to the life insurer. Also, the cost of funding a Medicare Set-Aside can be reduced through the use of a structured settlement.


Q. Other than workers’ compensation claims, are there any other uses for structured settlements?
A. Yes, structured settlements are often used to resolve a wide variety of litigated matters including:

    Long term disability claims
    Automobile injuries
    Product liability claims
    Slip and fall injuries
    General liability claims
    Medical malpractice claims
    Legal malpractice claims
    Errors and Omissions claims
    Wrongful death claims
    Nursing home abuse claims
    Punitive damage claims
    Slander and libel claims
    Construction defect claims
    Disputed property claims
    Sexual harassment claims
    Age discrimination claims
    Employment discrimination claims
    Wrongful termination claims
    Guardianship cases involving minors or incompetents
    Environmental pollution claims
        Asbestos
        Mold
        Lead
        Toxic chemicals

source: reduceyourworkerscomp.com

Getting the Best Car Insurance Quotes Online

In order to choose your car insurance,  internet is the key. When you go shopping for car insurance quotes online you have so many advantages and the most important thing is that you are saving time and power. You don't have to wait for an agent to come and tell you about the different car insurance quotes but get all the information right away . There are insurance comparison websites where you can go and get numerous quotes as likely at a smallest span of time, have the opportunity to compare them and select the best.

It's so simple to do comprehensive rate assessments on the internet and allows you to get your car insured at the lowest possible premium. Numerous insurers also offer specially lowered rates through this medium. Customers can get insurance at low premiums without missing out on high quality service.


Finding affordable car insurance is not just about looking for the cheapest premiums. You will furthermore have to balance a number of other components to make sure you are getting good worth for money.

your age and factors like the distance of your workplace from your home and the usage of the car also contribute to the premium rates. You can inform insurance companies all these aspects and get a great deal. Car insurers are likely to offer very good deals for new customers making an effort to find a better car insurance deal, the fact that many insurers will offer additional discounts for car insurance deals bought online with added savings.


When you have them, you have to be exceptionally cautious in settling on your decision. Insurance companies are required to give you state minimums but you are responsible to make sure you carrying the right insurance.

5 Tips for Buying Your Own Private Health Insurance

In the United States, health care insurance is necessary to help offset the medical expenses that continues to climb each year.  The seemingly endless rise in the cost of doctor’s visits, medications and medical procedures makes it impossible for even those with a decent income to afford a major accident or illness.  If you are struggling to make ends meet, a relatively minor illness or injury could devastate your finances and make it impossible to stay out of debt.  For this reason it is important for each person to make every effort possible to find and maintain a health insurance coverage.

Some people are fortunate enough to have group coverage through their employment, but many people (e.g., unemployed and self-employed individuals) do not have the same access and have to use  individual health insurance instead.

The following tips will help you in finding the best private (aka, individual) health insurance coverage at an affordable price.

5 Individual Health Insurance Buying Tips

Compare Policies Carefully

All health insurance polices are not created equally.  While most have the same basic outline, there are variations in coverage and price.  Do not assume that the most expensive policy has the best coverage or vice versa.  It is true that the better the coverage, the higher the premium, however you must closely examine each policy to ensure you are getting the protection for which you are paying.

When you do your comparison shopping, make a grid with critical factors down on the left side, e.g., price, deductible, copay/coninsurance, basic care coverage, urgent care coverage, emergency care coverage, maternity, prescription, and any factor that is critical to you. Across the top, write the plan name and contact information. As you go through each plan, note down the critical information so you can compare everything on one page.

Consider your Individual Needs

This point is worth emphasizing — as mentioned above, we are not all the same and no single plan is the best for everyone. The best plan is not the cheapest plan (e.g., lowest monthly premium), but the plan that will save you the most money for your current and near future needs.

Do you plan on having children in the near future?  Do you have pre-existing conditions?  It is important to pick a plan that meets your individual needs.  Childbirth, ongoing treatment of existing conditions and a host of other issues may require special attention from your insurance provider.  Find out if these situations are covered or if you can purchase additional coverage to ensure your insurance offers the protection you need at the time you need it.

Research the Company

It is not enough to find the best policy if the company backing the policy is not in a position to pay out on claims — or if they

• have a high tendency to reject your claim
• have a slow or troublesome claim process, or
• have a horrible customer service, etc.

You must do your reasearch to see if there are any red flags. It’s very easy to do by doing a few quick searches on the Internet, e.g., “{company} complaint”, “{company} customer service”, “{company} claim”, etc. If there are too many complaints and not enough compliments to balance out the complaints, it is best to cross it off your list.

Group Rates for Individuals

For many self-employed individuals the cost of individual health care insurance is simply too high to fit into a limited budget.  Fortunately in many states, a sole proprietor may qualify for lower group rates as an individual.  Where this is allowed, a single person can be considered as a “group of one” and benefit by having lower rates than other individual health care policies.

It is worth spending a few minutes typing in “{your state} health insurance support” and “{your state} health insurance assistance”, and see what might be available for you.

Some Insurance is Better than No Insurance

Regardless of the research you put into finding affordable individual health insurance, you may find you cannot afford the type of policy that best meets your needs.  If this is the case, remember that some insurance is better than not having any coverage at all.  Consider increasing deductibles or dropping some of the coverage if it helps bring basic coverage within your budget.  Health insurance regardless of where or how you purchase it is costly.  Unfortunately if you become sick or injured and are in need of medical care or hospitalization, the cost of being uninsured becomes much more difficult to manage.

Where to Find Affordable Individual Health Insurance

A friend of mine asked the same question not to long ago. After asking around a bit, the majority of people recommended that he looks at eHealthInsurance first. In addition, you can also check these best places to get insurance price quotes to find more options. Last but not least, ask around amongst your friends and see what they recommend.

source: moolanomy.com

Vision insurance linked to better vision

U.S. researchers suggest vision insurance was associated with eye-care visits, better reported vision and lower healthcare costs.

Yi-Jhen Li of the University of South Carolina in Columbia and colleagues compared the rates of eye care visits and vision impairment among working-age adults with vision insurance and without insurance.

Li said the study involved 27,152 respondents between the ages of 40-64 to the Behavioral Risk Factor Surveillance Survey 2008 and a sub-sample of 3,158 respondents, or 11.6 percent, with glaucoma, age-related macular degeneration and/or cataract.

The study, published in the Archives of Ophthalmology, found about 40 percent of the study population and the sub-sample with eye disease had no vision insurance.

"Our study empirically tracks an important consequential, process-outcome link both among the total sample of respondents and within the eye-disease sub-sample," the study authors said in the study. "In both groups, respondents who reported having had an eye examination in the prior year, on average, had better vision. These associations highlight the long-term benefits of vision insurance for preventing eye impairment."

"Our study empirically tracks an important consequential, process-outcome link both among the total sample of respondents and within the eye-disease sub-sample," the study authors said in the study. "In both groups, respondents who reported having had an eye examination in the prior year, on average, had better vision. These associations highlight the long-term benefits of vision insurance for preventing eye impairment."

The study also found those with vision insurance were more likely than those without insurance to report having had eye care visits, had no difficulty recognizing friends across the street and had no difficulty reading printed matter.

source: upi.com

83 billion more reasons for national catastrophic insurance program.

As if the “fiscal cliff” negotiations in Washington weren’t tough enough, there’s a new $83 billion problem.

That’s how much politicians from New York, New Jersey and other states want for damages from Hurricane Sandy. Plus, they want approval by the end of the year. For those who lament the lack of bipartisanship in Congress, Sandy has brought the parties together. In normal times, Sen. Charles Schumer, D-N.Y., and Rep. Peter King, R-N.Y., might not agree on where to eat lunch. With Sandy, they are united in their demand for federal money.

President Barack Obama’s opening bid to the Northeast was $50 billion. At this point, no one can be sure of an accurate number. Different pieces of government are compiling damage estimates; mass transit in New York took an especially hard hit. Private insurance will cover some repairs, but some homeowners whose dwellings were washed away may not have had federal flood insurance. A construction trade group pegs the homeowner rebuilding cost at $15 billion to $20 billion. Some money will go not just for rebuilding but for hardening against the next storm.

Whatever the number, the issue will further complicate budget talks that reportedly now are between just President Obama and House Speaker John Boehner, R-Ohio. Whatever the number, the money will come out of the treasury at a particularly bad time.

As we have editorialized many times, it doesn’t have to be this way. Congress could create a national catastrophic insurance program for what the industry calls “uninsurable perils.” In shirtsleeve English, a normal market can’t provide reasonably priced insurance to cover storms like Sandy. A normal market also can’t provide reasonably priced coverage for acts of terrorism, which is why the federal government has a public-private terrorism insurance program. In 2007, President George W. Bush signed an extension through 2014.

Similarly uninsurable perils include an 8.5 earthquake in downtown San Francisco — the earthquake there in 1906 led to a nationwide financial panic — and a Category 5 hurricane striking Miami before moving across the state to Tampa. That’s why former U.S. Rep. Ron Klein sponsored, and the House passed, a national catastrophic insurance plan under which the federal government would underwrite private bonds to pay damages. Those billions would not come out of the treasury.

The plan was designed not by the insurance industry but by wonks at the Congressional Research Service. States would have to first create their own layers of coverage, as Florida has, for lesser storms. The main opposition continues to come from the global, unregulated reinsurance industry, which sells the coverage for those worst-case scenarios. That cost is the main driver of premium increases.

Sandy was a tragedy. Given climate change and weird weather, there will be more. Congress needs no more evidence to justify a national catastrophic insurance program.

source: palmbeachpost.com

Term Insurance: Best Life Insurance for Smart People

“Do you have the best life insurance policy to protect your family?” asked a friend of mine who sells insurance.

With myriad of different types of short-term insurance policies and long-term insurance polices, it’s easy to forget that the purpose of a life insurance policy is simply to protect your family members in case if you die.



Me: I have the term insurance.

Friend:  Well, you are not thinking about your future. If I were you, I would buy a Whole Life policy instead.

His knee jerk response didn’t surprise me. In fact, I expected this response as I know that he works for a large insurance company.

Me: I do think about my future, so I buy term insurance and invest the difference in an Index fund.

Friend:  That’s good, but most people don’t have the discipline to invest. Most people spend the difference. As time goes, they find it to be harder to invest as their expenses grow.

Me: Term insurance is the best life insurance policy for the smart people. Now, may I ask you a question and expect an honest answer?

Friend: Of course. I am your friend first.

Me:  Imagine that I own a bank. I wanted to know if  you will be willing to open a savings account. Trust me, it is  insured  by FDIC. Don’t forget that I am your friend first; but you have to comply with some requirements.

Friend: What are they?

Me:  The bank will use all of your first year deposits to cover our costs, but don’t worry because part of it will be saved to protect your family if you die.  Also, we will charge 2%  fees from the second year to manage your savings account. You can borrow money at any time, but you will have to pay interest on it. Last but not least, if you die then we will protect your family for the coverage amount. The cash value will be ours to keep.

Friend:  Am I a fool to do that?  I can find a bank myself that can open a savings account without any strings attached. Why do I ever wanted to throw money away for the first year and pay you to manage my savings account?

Me:  Precisely, that’s the question I am asking you. What I described is the nemesis of my beloved term life insurance policy. The ball is in your court, my friend.

Friend:  I think I have the best insurance policy for you that can provide best of both worlds — coverage for the death benefits as well as cash value — if you die. Why don’t you buy the Universal life insurance policy? Our company always thinks about you — the client — first.

Me:  I know that you are my friend, and you work for a well-known insurance company. The only problem I have with the Universal life insurance policy is its rate of return in the long haul. The average rate of return is only 2.19% in 25 years, and measly  .99% in 50 years. I thought that Social Security run by our government returns better than that. Don’t forget that if you add average inflation rate of 3%, you are losing money by investing in a Universal Life insurance policy.

Friend:  I think you are overlooking the fact that you are not a professional money manager. You can lose everything, if you invest money yourself in equities.

Me:  Don’t worry. I have John Bogle on my side. He is kind enough to think about a common man with common sense. I can buy the life protection part of the insurance cheaply with a term policy,  and invest the rest in any of his funds randomly to beat the smartest fund manager on Wall Street consistently.

Friend:  Our company allows you to invest in growth funds, and they return in double-digit. Don’t you think that is a better strategy than simply investing in index funds?

Me:  That may be true, but I did say that John Bogle’s index funds beat most mutual funds consistently.  You will always find funds that can return in double digits for several years, but not consistently. Since I am not as smart as these fund managers are, I would rather invest in an index fund with no fees.

Needless to say that my friend had an urgent call from someone else,  so he has promised me that he will put facts together for my benefit. I am still waiting  for the best insurance policy to protect my family.

source: streetsmartfinance.org