The National Consumers League released a position paper on structured settlements in August 2026. The paper sets out NCL’s view of why structured settlements matter to injured people, distinguishes structured settlements from the secondary market that purchases payment rights, and summarizes the state law framework designed to protect settlement recipients. NSSTA is one of the organizations named in that coalition.
The full paper is available at the end of this post. The summary below identifies what the document covers.
What does NCL say structured settlements accomplish?
NCL’s stated position is that structured settlements allow seriously injured people and their families to live with economic security, dignity, independence, and freedom from reliance on government. The paper describes structured settlements as a private-sector funding alternative to taxpayer-financed assistance programs, meeting long-term medical and basic living needs through an assured stream of payments tailored to the injured person’s needs.
The paper defines a structured settlement as a stream of periodic payments made to an injured party through the purchase of a fixed and determinable annuity issued by a highly rated life insurance company. It notes that these settlements are negotiated between claimants and defendants through their respective attorneys, each with the assistance of licensed brokers appointed by the life insurance companies.
Federal tax law provides specific treatment for damages received on account of personal physical injuries or physical sickness. Section 104(a)(2) of the Internal Revenue Code excludes qualifying damages from gross income.
How does NCL distinguish structured settlements from the secondary market?
A recurring point of public confusion is the difference between a structured settlement and the later purchase of the payments it produces. NCL’s paper addresses both, and treats them as separate subjects.
A structured settlement is the protective instrument itself: guaranteed, long-term, income tax-free periodic payments designed around the injured person’s needs.
Factoring is the secondary transaction. NCL describes factoring as the purchase of payment streams at a discount by finance companies, and identifies two problems with the practice. Factoring companies pressure claimants to sell when no genuine need to sell exists, and they typically apply high discount rates, paying small amounts in exchange for large amounts of future payments.
NCL acknowledges that rare circumstances exist in which a claimant may have a genuine need to unwind a settlement. In those cases, the paper states that a fair and reasonable discount rate and fair and reasonable terms are essential, and observes that most factoring transactions do not meet that standard.
Where does state law protection stand today?
All fifty states and the District of Columbia have enacted Structured Settlement Protection Acts. These laws generally require court approval before structured settlement payment rights may be transferred and establish protections intended to safeguard the interests of the payee.
Two dates help illustrate the development of the current nationwide framework. The District of Columbia enacted its Structured Settlement Protection Act in 2018. New Hampshire enacted its act in 2021, completing coverage across all fifty states and the District of Columbia.
What does the Maryland framework require?
NCL’s paper identifies Maryland as having particularly strong consumer protections governing transfers. The Maryland Court of Appeals adopted Rules of Practice and Procedure at Title 15, Chapter 1300, Rules 15-1301 through 15-1307, effective January 1, 2016.
Those rules require that a petition involving a Maryland resident payee be filed in the Circuit Court for the county where the payee resides, prohibit action on a petition without a hearing, and require the payee to attend that hearing in person unless excused for good cause, together with the payee’s independent professional advisor and a representative of the petitioner. The rules also govern what a petition must contain, including the settlement agreement, the annuity documentation, the payee’s written consent, an affidavit from the independent professional advisor, and information about prior transfers involving the same payee.
The rules were developed following concerns about transfers involving lead-poisoning settlements and were intended to strengthen judicial review of proposed transfers. The full requirements are set out in the paper.
What is the PTSD tax question?
NCL’s paper also addresses the tax treatment of damages recovered on account of post-traumatic stress disorder.
Section 104(a)(2) excludes qualifying damages received on account of personal physical injuries or physical sickness from gross income. The statute also provides that emotional distress is not treated as a physical injury or physical sickness for purposes of the exclusion. The unresolved question is how medically diagnosed PTSD should be treated under that standard.
NSSTA has asked the Internal Revenue Service to clarify that damages received on account of clinically diagnosed PTSD may qualify for exclusion under Section 104(a)(2), and members of the House Ways and Means Committee have written to Treasury and the IRS requesting the same clarification. No revenue ruling has been issued resolving the question.
Read more: NSSTA Advocates for IRS Guidance Recognizing PTSD as a Physical Injury Under the Tax Code
That article sets out NSSTA’s filing and the supporting congressional correspondence.
Who is working on this together?
NCL’s paper describes a coalition approach to protecting people who receive personal injury settlements. It identifies the American Association of People with Disabilities and NSSTA as partners in advocacy efforts, and credits consumer advocates, disability organizations and structured settlement industry leaders with helping advance Structured Settlement Protection Acts across the country.
On the shared responsibility among those groups, NCL Chief Executive Officer Sally Greenberg stated:
“All of us, structured settlement consultants, attorneys, judges, and consumer advocates and leaders in the disability rights community, have a shared responsibility to help protect injured persons and people with disabilities from abusive and misleading financial practices.”
Why this matters
Consumer protection in this area was not built by any one organization, and it was not built quickly. It took decades of work by legislators, consumer advocates, disability organizations, legal professionals and structured settlement industry leaders to establish protections across every state and the District of Columbia.
The National Consumers League position paper is a useful record of that work, and of the continuing importance of protecting the long-term financial interests of injured people. The same is true of the work that is not finished. The tax treatment of PTSD damages remains unresolved, and NSSTA continues to advocate for clear guidance.
Read the full paper
The National Consumers League’s August 2026 position paper on structured settlements is available in full below.
Structured Settlements Report August 2026 1_0.pdf
