Structured settlement

A structured settlement is a financial or insurance arrangement, including periodic payments, that a claimant accepts to resolve a personal injury tort claim or to compromise a statutory periodic payment obligation. Structured settlements were first utilized in Canada and the United States during the 1970s as an alternative to lump sum settlements. Structured settlements are now part of the statutory tort law of several common law countries including Australia, Canada, England and the United States. Although some uniformity exists, each of these countries has its own definitions, rules and standards for structured settlements. Structured settlements may include income tax and spendthrift requirements as well as benefits. Structured settlement payments are sometimes called “periodic payments.” A structured settlement incorporated into a trial judgment is called a “periodic payment judgment."

Internal Revenue Code

The Internal Revenue Code (or IRC; more formally, the Internal Revenue Code of 1986, as amended) is the main body of domestic statutory tax law of the United States organized topically, including laws covering the income tax (see Income tax in the United States), payroll taxes, gift taxes, estate taxes and statutory excise taxes. The Internal Revenue Code is published as Title 26 of the United States Code (USC), and is also known as the internal revenue title.

Genesis of tax codes in the United States

Prior to 1874, U.S. statutes were not codified. That is, they were not set forth in one comprehensive subject matter title, but were instead contained in the various acts passed by Congress. Codifications of statutes (including tax statutes) undertaken in 1873 resulted in the Revised Statutes of the United States, approved June 22, 1874, effective for the laws in force as of December 1, 1873 (title 35 of which was the internal revenue title). Another codification was undertaken in 1878.

In 1919, a committee of the U.S. House of Representatives began a project to recodify U.S. statutes which eventually resulted in a new code in 1926 (including tax statutes).

Internal Revenue Code of 1939

The tax statutes were re-codified by an Act of Congress on February 10, 1939 as the "Internal Revenue Code" (later known as the "Internal Revenue Code of 1939"). The 1939 Code was published as volume 53, Part I, of the United States Statutes at Large and as title 26 of the United States Code. Subsequent permanent tax laws enacted by the United States Congress updated and amended the 1939 Code.

U.S. Code collection

Section 1, act May 24, 1924, ch. 182, § 8, formerly § 1, 43 Stat. 140; renumbered § 8 and amended Feb. 23, 1931, ch. 276, § 7, 46 Stat. 1207, related to establishment of Foreign Service.

Section 1a, act May 3, 1945, ch. 105, § 1, 59 Stat. 102, related to Congressional declaration of purpose.

Section 2, act May 24, 1924, ch. 182, § 9, formerly § 2, 43 Stat. 140; renumbered § 9 and amended Feb. 23, 1931, ch. 276, § 7, 46 Stat. 1207, related to definition of a Foreign Service officer and assignment to duty generally.

Section 3, act May 24, 1924, ch. 182, § 10, formerly § 3, 43 Stat. 140; renumbered § 10 and amended Feb. 23, 1931, ch. 276, § 7, 46 Stat. 1207; Apr. 24, 1939, ch. 84, § 2, 53 Stat. 583; May 3, 1945, ch. 105, §§ 4, 5, 59 Stat. 102, 103, related to grading, classification, and compensation of officers.

Section 3a, act May 24, 1924, ch. 182, § 33, as added Feb. 23, 1931, ch. 276, § 7, 46 Stat. 1215; amended Apr. 24, 1939, ch. 84, § 4, 53 Stat. 588, related to salary increases.

Section 4, act May 24, 1924, ch. 182, § 11, formerly § 4, 43 Stat. 140; renumbered § 11 and amended Feb. 23, 1931, ch. 276, § 7, 46 Stat. 1215; June 29, 1935, ch. 337, 49 Stat. 436, related to appointment and commission of officers.

Section 5, act May 24, 1924, ch. 182, § 12, formerly § 5, 43 Stat. 141; renumbered § 12 and amended Feb. 23, 1931, ch. 276, § 7, 46 Stat. 1208, related to examination and appointment on probation of officers.

Section 6, act May 24, 1924, ch. 182, § 12, formerly § 5, 43 Stat. 141; renumbered § 12 and amended Feb. 23, 1931, ch. 276, § 7, 46 Stat. 1208, related to appointment to a class and not to a particular post.

Section 7, act May 24, 1924, ch. 182, § 14, as added Feb. 23, 1931, ch. 276, § 7, 46 Stat. 1208; amended May 3, 1945, ch. 105, § 6, 59 Stat. 103, related to reports and recommendations for promotions.

United States Court for China

The United States Court for China was a United States District Court that had jurisdiction over U.S. citizens in China. It existed from 1906 and 1943 and had jurisdiction in civil and criminal matters, with appeals taken to the U.S. Court of Appeals for the Ninth Circuit in San Francisco.

The District had only one judge, and those on trial sometimes had to wait months for proceedings. The District also grew to incorporate the Philippines and Guam in its jurisdiction.

Because the court was based outside of the United States, the United States Constitution did not apply; there was no right to a jury trial nor to constitutional due process.

Medicaid

Medicaid is the United States health program for eligible individuals and families with low incomes and resources. It is a means-tested program that is jointly funded by the states and federal government, and is managed by the states.^[1] Among the groups of people served by Medicaid are eligible low-income parents, children, seniors, and people with disabilities. Being poor, or even very poor, does not necessarily qualify an individual for Medicaid.^[2] It is estimated that approximately 60 percent of poor Americans are not covered by Medicaid.^[3] Medicaid is the largest source of funding for medical and health-related services for people with limited income in the US. Because of the aging population, the fastest growing aspect of Medicaid is nursing home coverage

HIV

Medicaid is also the program that provides the largest portion of federal money spent on health care for people living with HIV. Typically, poor people who are HIV positive must progress to AIDS (T-cell count of 200 or under) before they can qualify under the "disabled" category. More than half of people living with AIDS are estimated to receive Medicaid payments. Two other programs that provide financial assistance to people living with HIV/AIDS are the Social Security Disability Insurance (SSDI) and the Supplemental Security Income. However, Medicaid eligibility policy contrasts with the Journal of the American Medical Association (JAMA) guidelines which recommend therapy for all patients at 350 or certain patients higher, and according to a new recent large scale study, asymptomatic HIV positive patients who started on medication with T-cell counts 350 to 500 had a 70 percent higher survival rate than those who waited. This study's results show that waiting even until the cell count reaches 350 (current JAMA recommendation) increases the risk of death.^[13] As many patients cannot afford expensive medicines without Medicaid help, HIV annual death counts have failed to decline significantly since 2002.

United States National Health Insurance Act

The United States National Health Insurance Act (Expanded and Improved Medicare for All Act) (H.R. 676), is a bill submitted to the United States House of Representatives by Representative John Conyers Jr., D-MI, which as of March 19, 2009 has 69 recorded cosponsors. It was first introduced, with 25 cosponsors, in 2003,^[1] and reintroduced each session since then. The act calls for the creation of a universal single-payer health care system in the United States, in which the government would provide every resident health care free of charge. In order to eliminate disparate treatment between richer and poorer Americans, the Act would also prohibit private insurers from covering any treatment or procedure already covered by the Act. The bill is currently in the House Energy and Commerce Committee, as well as the Committees on Ways and Means, and Natural Resources. John Dingell (D-MI), former chair of the Energy and Commerce Committee, has each session introduced a bill with a similar title ("National Health Insurance Act") H.R. 15, which was first introduced in 1933 by his father, John Dingell, but which does not provide for universal health care.

H.R. 676 has drawn significant attention beginning in July 2007 because of the release of the Michael Moore documentary Sicko which focuses on the status of health care in the United States, which is the only developed country which does not have universal health care.^[2][3] The DVD edition of the film also included a segment (Sicko Goes To Washington) promoting the bill

structured settlement company

Structured settlement companies can help individuals by helping the processing of settlement claims in an efficient manner. Structured settlement companies focus on reducing litigation costs thereby saving the defendant valuable money that can be used to pay the beneficiary. An individual who gets a structured settlement payment also stands to benefit by taking the service of a structured settlement company if he wishes to convert his structured settlement payments into ready cash. Structured settlement companies have contacts with investors who pay a person for his cash flow.

A person who wishes to transfer his payments to another person can do so with the help of a structured settlement company. The terms of a settlement are governed by state and federal laws and need to be understood properly before a settlement can be executed. Creating a Structured Settlement Agreement and obtaining a court approval for a structured settlement transaction are some of the activities that the settlement companies manage. Their good working relationships with insurance companies and their knowledge of laws that govern settlements mean that the beneficiary of a structured settlement gets through the procedures smoothly.

With the presence of a structured settlement company as a third party between a defendant and a beneficiary, the beneficiary can avail the settlement sum in a variety of ways depending upon his present financial conditions and lifestyle. Settlements can also be offered through an equity annuity which enables the beneficiary to invest the money obtained and earn either through a guaranteed minimum or according to the stock market. Thus, settlement companies that offer an equity annuity give people a chance to reap payoffs on the principal and at the same time watch it grow.

An individual involved in litigation needs help in filing a claim, managing documents, and assessing present and future damages. Along with a competent lawyer, he is helped in this by a structured settlement company that can gauge an individual's future requirements and advise upon a settlement amount as well as the periodicity of payment. Their services are all the more useful in cases that involve catastrophic accidents that can lead to a loss of earning capability and in some cases reduced life expectancy. The companies use their expertise to draft a payment proposal that raises the issue of the plaintiff's requirements and the defendant's responsibility to the plaintiff's needs.

Structured Settlements in the United States

The United States has enacted structured settlement laws and regulations at both the federal and state levels. Federal structured settlement laws include sections of the (federal) Internal Revenue Code^[1]. State structured settlement laws include structured settlement protection statutes and periodic payment of judgment statutes. Medicaid and Medicare laws and regulations affect structured settlements. To preserve a claimant’s Medicare and Medicaid benefits, structured settlement payments may be incorporated into “Medicare Set Aside Arrangements” “Special Needs Trusts."

Structured settlements have been endorsed by many of the nation's largest disability rights organizations, including the American Association of People with Disabilities ^[2] and the National Organization on Disability ^[3].

[edit] Definitions

The United States definition of “structured settlement” for federal income taxation purposes, found in Internal Revenue Code Section 5891(c)(1) (26 U.S.C. § 5891(c)(1)), is an "arrangement" that meets the following requirements:

• A structured settlement must be established by:
  • A suit or agreement for periodic payment of damages excludable from gross income under Internal Revenue Code Section 104(a)(2) (26 U.S.C. § 104(a)(2)); or
  • An agreement for the periodic payment of compensation under any workers’ compensation law excludable under Internal Revenue Code Section 104(a)(1) (26 U.S.C. § 104(a)(1)); and
• The periodic payments must be of the character described in subparagraphs (A) and (B) of Internal Revenue Code Section 130(c)(2) (26 U.S.C. § 130(c)(2))) and must be payable by a person who:
  • Is a party to the suit or agreement or to a workers' compensation claim; or
  • By a person who has assumed the liability for such periodic payments under a qualified assignment in accordance with Internal Revenue Code Section 130 (26 U.S.C. § 130).

[edit] Legal Structure

The typical structured settlement arises and is structured as follows: An injured party (the claimant) settles a tort suit with the defendant (or its insurance carrier) pursuant to a settlement agreement that provides that, in exchange for the claimant's securing the dismissal of the lawsuit, the defendant (or, more commonly, its insurer) agrees to make a series of periodic payments over time. The insurer, a property/casualty insurance company, thus finds itself with a long-term payment obligation to the claimant. To fund this obligation, the property/casualty insurer generally takes one of two typical approaches: It either purchases an annuity from a life insurance company (an arrangement called a "buy and hold" case) or it assigns (or, more properly, delegates) its periodic payment obligation to a third party which in turn purchases an annuity (which arrangement is called an "assigned case").

In an unassigned case, the property/casualty insurer retains the periodic payment obligation and funds it by purchasing an annuity from a life insurance company, thereby offsetting its obligation with a matching asset. The payment stream purchased under the annuity matches exactly, in timing and amounts, the periodic payments agreed to in the settlement agreement. The property/casualty company owns the annuity and names the claimant as the payee under the annuity, thereby directing the annuity issuer to send payments directly to the claimant. If any of the periodic payments are life-contingent (i.e., the obligation to make a payment is contingent on someone continuing to be alive), then the claimant (or whoever is determined to be the measuring life) is named as the annuitant or measuring life under the annuity.

In an assigned case, the property/casualty company does not wish to retain the long-term periodic payment obligation on its books. Accordingly, the property/casualty insurer transfers the obligation, through a legal device called a qualified assignment, to a third party. The third party, called an assignment company, will require the property/casualty company to pay it an amount sufficient to enable it to buy an annuity that will fund its newly accepted periodic payment obligation. If the claimant consents to the transfer of the periodic payment obligation (either in the settlement agreement or, failing that, in a special form of qualified assignment known as a qualified assignment and release), the defendant and/or its property/casualty company has no further liability to make the periodic payments. This method of substituting the obligor is desirable for property/casualty companies that do not want to retain the periodic payment obligation on their books. Typically, an assignment company is an affiliate of the life insurance company from which the annuity is purchased.

An assignment is said to be "qualified" if it satisfies the criteria set forth in Internal Revenue Code Section 130 [1]. Qualification of the assignment is important to assignment companies because without it the amount they receive to induce them to accept periodic payment obligations would be considered income for federal income tax purposes. If an assignment qualifies under Section 130, however, the amount received is excluded from the income of the assignment company. This provision of the tax code was enacted to encourage assigned cases; without it, assignment companies would owe federal income taxes but would typically have no source from which to make the payments