July 2015

The Benefits of Structured Settlements

Once a worker suffers an occupational injury while working for you, he or she becomes your responsibility for life. If the injury recurs or flares up, the employer remains responsible for providing the necessary medical treatment. This holds true even years after a relatively minor accident.

Some workers’ compensation claims remain open for years, or even decades. Using a structured settlement can help both your organization and the injured employee move forward.

Structured settlements generally come into play when an injured worker ends up suing the employer for additional amounts or for a subsequent injury. Under a structured settlement, the claimant generally agrees to stop any legal action. In return, he or she receives a settlement payment from the defendant — in this case, the employer. This releases the employer from future obligations for that particular injury. This avoids a long, drawn-out court case and allows both the employer and employee to move on.

When a plaintiff receives a settlement, it can come in the form of a lump sum or as a structured settlement. With a structured settlement, the plaintiff receives periodic scheduled payments. Payments can last for a year, for the claimant’s lifetime or somewhere in between.

When an organization and employee agree to a structured settlement, they will generally use a structured settlement broker. An experienced broker can help you negotiate the terms of the agreement and arrange funding. Structured settlements generally are funded by a single-premium annuity contract held by the employer.

A lump-sum payment will often count toward taxable income. With a large lump sum, taxes could take a considerable percentage. Structured settlements may have some tax advantages

Structured settlements offer the following advantages:

·They release employers from future obligations. Both the employer and employee can move on.

·They provide a continuing stream of income to injury victims. This minimizes the risk that injured workers will spend away their claims proceeds and run out of money.

·They can provide injured workers a tax-free source of income. Lump-sum payments are often considered taxable income. If a worker receives a large lump-sum payment, taxes will take a considerable chunk of it.

·They typically prohibit the claimant from assigning or transferring his/her rights to receive future payments. This helps prevent fraud, embezzlement and running out of funds.

For more information on using structured settlements, please contact the PCOC Insurance Program department of EPIC at (877) 860-7378 or, email us @ ProPest@epicbrokers.com. Also check out: www.pcocinsurance.com.