How Are Insurance Settlement Proceeds Reported On the FAFSA?
Award Year: 2024-25 KA-36682 Helpfulness Rating 164 page viewsThis guidance is specific to the 2024-25 award year and later. For 2023-24* award year guidance see AskRegs Q&A, How Are Insurance Settlement Proceeds Reported On the FAFSA?
It depends on whether the life, health, and/or home insurance distributions or proceeds are taxable. If the funds are taxable, they will be included in the adjusted gross income (AGI) reported on the FAFSA for the base year in which the distribution was received. Starting with the 2024-25 award year under the FAFSA Simplification Act, untaxed portions of such distributions are not reported on the FAFSA, are not included in need analysis, and are not treated as other financial assistance (OFA) when packaging the student with Title IV aid.
See also AskRegs Knowledgebase Q&As:
- Can We Use PJ To Include Income That Was Excluded From Need Analysis By the FAFSA Simplification Act?
- How Does an Insurance Settlement Paid Toward Tuition and Fees Affect the Student's Eligibility?
For more information on insurance settlements resulting from a natural disaster, see GEN-17-08.
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