The amount of a workers’ compensation settlement you keep in Arizona is determined by several factors. Here are some of the workers’ comp settlement deductions:
Attorney’s Fees
A portion of your settlement may be deducted for attorney fees. Hence, discuss this with your attorney to understand how much will be deducted. Hiring an attorney on a contingency basis means the fee is a percentage of your settlement. Arizona law limits this to 25% for the first ten years following the award.
Medical Expenses
Your settlement should cover the medical expenses associated with your injury. If you currently have unpaid medical bills, it can also be deducted from your settlement. The settlement may also cover any out-of-pocket costs you have already paid. Moreover, if you still need ongoing medical treatment, a portion of the settlement may be set aside in a Medicare Set-Aside (MSA) fund to cover future medical expenses.
Costs and Expenses
Your compensation may be reduced by costs including filing fees, court costs, and fees for obtaining medical data. The particulars of your case may affect these deductions.
Liens and Subrogation
Health insurers or disability benefit providers may have a right to a portion of your settlement. This applies when they have paid benefits related to your injury. As a result, these liens reduce the amount you keep.
Taxes
Federal and state income taxes do not normally apply to workers’ compensation benefits. This changes if you have received other benefits. Social Security Disability Insurance (SSDI) benefit is an example. If you’re also receiving SSDI benefits, the combined total from both sources cannot exceed 80% of your pre-injury salary. For instance, the Social Security Administration may reduce your SSDI benefits to bring the total below this threshold. This reduction is known as the “workers’ compensation offset” and is considered taxable.
Consult with an experienced Arizona workers’ compensation attorney. They provide tailored legal assistance. It ensures you understand all workers’ comp settlement deductions and maximize the amount that you will receive.
