Employers or their insurance
companies now have the option of
using Qualified Assignments or
Reinsurance in workers'
compensation settlements and not
just physical injury liability claims.Qualified Assignments or Reinsurance 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) will 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, purchasing an annuity to fund its liability and is usually 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 post-1997 workers’ compensation settlements and not just physical injury liability claims.

This bill is prospective. It applies only to work injuries occurring after the date the bill was signed (August 5, 1997). For claims with a date of injury before 08/05/97 a reinsurance product can be used so that the employer or insurer will not own the settlement annuity.

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 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 a self-insured employer.

If you have any questions or want more information, please call Susan Mease at 1-800-447-1153.