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Are Settlements Workers Compensation?

Sophia Al-Mansoor • • 7 min read
Are Settlements Workers Compensation?

There are two ways a workers comp claim can be settled: as a lump-sum or structured settlement

structured settlement
A structured settlement is a negotiated financial or insurance arrangement through which a claimant agrees to resolve a personal injury tort claim by receiving part or all of a settlement in the form of periodic payments on an agreed schedule, rather than as a lump sum.
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. In the case of a lump-sum settlement, the employee signs a settlement agreement concluding the case and in return, they get a one-time payment from the employer or the insurance company.

Is workers comp settlement considered income?

In short, no. According to the Internal Revenue Service (IRS), workers' comp settlements under federal law do not qualify as taxable income for state or federal levels.

Can I ask workers comp for a settlement?

No, in NSW you can't claim workers compensation (WorkCover) pain and suffering payouts, however you can claim for permanent impairment, which is essentially a lump sum payment to compensate you for the overall effect your work injury has had on your life.

Sophia Al-Mansoor
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Sophia Al-Mansoor

Sophia analyzes international trade, startup ecosystems, retail transformation, and supply chain logistics for modern digital publications.