Does My VCF Award Reduce
My USVSST Payment?

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The United States Victims of State Sponsored Terrorism Fund (USVSST Fund) pays 9/11 families on the compensatory-damages portion of their court judgments against Iran. A worry we hear often is that a September 11th Victim Compensation Fund (VCF) award will be quietly subtracted from that payment. It will not. The provision that once barred VCF recipients was removed by the 2019 Clarification Act, and the Fund's own materials now say VCF claims no longer affect USVSST payments. These are heavy documents to sit with, so this page keeps to what the Fund's own materials actually say.

What the Fund's FAQ says

The Fund's own Frequently Asked Questions address this directly. Its plain statement reads:

“VCF claims no longer affect payments from the USVSST Fund. The Act no longer contains an earlier statutory provision that precluded USVSST Fund payments to eligible claimants who had received an award or award determination from the September 11th Victim Compensation Fund.”

Source: USVSST Fund Frequently Asked Questions, FAQ 4.6. The earlier VCF bar was struck by the Clarification Act of 2019 (Public Law 116-69). The Fund is governed by 34 U.S.C. § 20144.

Does a VCF award reduce it? No, and here is what changed

Years ago, the answer would have been different. The original statute contained a provision that precluded USVSST payments to claimants who had received a VCF award or award determination. The 2019 Clarification Act removed that provision. Today the two are separate federal programs with separate rules, and receiving one does not reduce the other.

The Fund goes a step further and names VCF money specifically. In listing the sources you must disclose, the FAQ places VCF money (VCF1 or VCF2), whether received as an award, an award determination, or an estate distribution, among the items that must be identified on the Application Form but will not be considered offsets. So a VCF award neither disqualifies you nor shrinks your USVSST payment. You still disclose it.

Does life insurance reduce it? No

The same logic covers life insurance. The statute lists life insurance among the “source other than this Fund” items, alongside pension funds, death-benefit programs, and government payments, so you must disclose it and keep the Fund updated. But the FAQ specifically names life insurance as an item that must be identified yet “will not be considered” an offset when your award is calculated. Defense Base Act (DBA) benefits are treated the same way. You report them; they do not come out of your USVSST payment.

What do the offset rules actually count? The 30% rule

The provision that can affect the timing and amount of a payment is not about VCF, life insurance, or DBA benefits at all. It is about other recoveries on the same judgment: compensatory-damage money you have already collected, or are scheduled to collect, toward your claim from a source other than the Fund. Enforcing your judgment against seized assets is the common example.

That rule works by a 30% line:

• If you have received 30% or more of the compensatory damages owed on your claim from another source, you wait to receive from the Fund until other eligible claimants have also reached 30% from the Fund.
• If you have received some but less than 30% from another source, your award is calculated on the difference, so claimants are brought toward parity.

Importantly, the Fund states this 30% provision is not a cap on your award. It is an accounting and parity mechanism that keeps recoveries even across claimants over time. And the items above, life insurance, DBA benefits, and VCF money, are expressly excluded from this offsetting.

Do I still have to report other payments? Yes, and reporting is not an offset

Yes. Disclosing a payment and having it reduce your award are two different things. VCF money, life insurance, and DBA benefits must be identified on the Application Form even though they are not counted as offsets. You also have a continuing obligation to keep your information current, including new money received from other sources. Reporting keeps your file accurate; it does not shrink your award.

Is an “offset” the same as a tax?

No. An offset is about how the Fund calculates your award, not about what you may owe on it. Whether any payment is taxable is a separate question that turns on your own situation, and the Fund itself sends every claimant to a tax professional and issues no IRS form for the award. If you have a tax question, take your award paperwork to a qualified CPA or tax professional.

Sources

• USVSST Fund, Frequently Asked Questions, FAQ 4.6 at usvsst.com: “VCF claims no longer affect payments from the USVSST Fund.”
• USVSST Fund, Frequently Asked Questions, FAQ 4.8: life insurance payments, Defense Base Act (DBA) benefits, and money received from the VCF “must be identified on the Application Form, but will not be considered offsets.”
• 34 U.S.C. § 20144(j)(6), defining “source other than this Fund” to include life insurance, pension funds, and death-benefit programs.
• 34 U.S.C. § 20144(d)(3)(B) (Minimum payments) and USVSST Fund FAQ 4.10 and FAQ 4.11, the 30% provision and the Fund's statement that it is not a cap on the award.
• Clarification Act of 2019 (Public Law 116-69), which struck the earlier provision barring USVSST payments to VCF recipients.