Once you receive your Victim Compensation Fund (VCF) decision letter, you should expect to receive your first payment within 30 days. The VCF is authorized to pay 10 percent of your total loss in the first installment. The VCF will send you the remainder of your payment sometime between 2016 and 2017.
Prior to receiving your first payment, you can take steps to protect your funds. You should keep in mind a few facts:
- Taxation — The IRS excludes payments made through the VCF as gross income. You do not need to declare the award on your tax return and the amount you receive is not taxable.
- Bankruptcy and creditors’ rights — The manner in which your VCF award is handled in bankruptcy is determined on a case-by-case basis. Before filing for bankruptcy, you should consult with a lawyer about whether creditors have a right to your VCF payments.
- Veterans benefits — In some cases, your VCF compensation will be reduced by the amount you receive in veterans benefits. Whether the award is offset and by how much depend on the type of veteran’s benefits you receive. The Veterans Administration is responsible for the issuance of veterans benefits related to the 9/11 attacks.
- Medicare liens — The Centers for Medicare & Medicaid Services (CMS) typically imposes a Medicare Secondary Payer (MSP) claim when a patient receives compensation for treatments covered under the Medicare or Medicaid programs. However, CMS has decided to waive its MSP claims against VCF awards. No liens will be placed on your VCF award by CMS.
- Attorney fees — Your attorney is permitted to charge you only 10 percent of the total award you receive under the VCF and other 9/11-related litigation.
- Payment options — If you live within the United States, your payments will be issued via electronic deposit to your savings or checking account. However, the VCF will not issue electronic payments to foreign banks. If you live outside the United States, you will receive a check.
Barasch & McGarry is available to answer your questions about receiving and protecting your VCF compensation.