Workers� Compensation and The Balanced Budget Act of 1997
Qualified Assignments Can Now Be Applied to Workers� Compensation Claim Settlements
What this change means:
For years, the Internal Revenue Code Section 130 has provided for physical injury liability structured settlements to be assigned with a Qualified Assignment. This means that the defendant (or its liability insurance company) may assign the promise to make the future payments to a third party by means of a "qualified assignment." The assignment company assumes the responsibility of issuing checks, may purchase an annuity or Treasury Bond to fund its liability and is often backed by a financially strong parent or sister company, providing additional financial security to the injured person. With the signing of the Balanced Budget Act of 1997, IRC 130 is amended and expanded so that employers or their insurance companies now have the option of using Qualified Assignments in workers� compensation settlements and not just physical injury liability claims.
Workers Compensation claim settlements will still have to be approved by the Industrial Commission, Court, ALJ or other entity that approves workers� compensation settlements in each state.
This bill is prospective. It applies only to work injuries occurring after the date the bill was signed (August 5, 1997).
In many states, the applicable regulatory body (Industrial Commission, Court, ALJ, etc.) currently requires that the employer own and guarantee the annuity. Those specific regulatory bodies will have to determine if they will accept in the future the use of Qualified Assignment as outlined in the amended IRC 130.
This change will allow self-insured employers to settle workers� compensation claims with a structured settlement and completely remove the liability from their balance sheet.
With this change, injured employees can settle their claim and receive a level of financial security that will often be greater than that offered by their employer.
If you have any questions or want more information, please call Susan Mease at 1-800-447-1153.
Qualified Applications|Non-Qual. Apps
Copyright © 2003-2018 Bridge Settlement Corporation