OPINION
Before the Court is the objection of the Chapter 7 Trustee (the “Trustee”) to the claim of exemptions filed by Jesus Arella-no (“Debtor”). Debtor seeks to exempt funds and property that are the proceeds of a lump sum workers’ compensation settlement. For the reasons below, the Trustee’s objection will be overruled.
I. Procedural and Factual History
In 2010, Debtor sustained a broken hip at his place of work. Thereafter, he filed a disability claim with the Workers’ Compensation Commission for the State of Maryland (the “State”). On December 1, 2011 Debtor entered into a settlement agreement with his employer and the State whereby Debtor would receive a lump sum payment of $225,000. In addition, $72,741.88 was paid to Debtor as a Medicare “set aside,” which was the estimated amount of Debtor’s need for future treatment for his injuries. In the settlement agreement Debtor acknowledged that in accepting the funds, he was agreeing that Medicare was not required to pay any medical expenses related to the injury until the Medicare “set aside” was expended. Tr. Ex. “A.” In January 2012, Debtor deposited both the lump sum settlement and the Medicare “set aside” in his bank accounts.
Debtor admitted that he used to funds to make several purchases — a 2005 Ford F-150 for $17,000, real property located at 3587 Cannon Lane, York PA 17408 (the “3587 Property”) for $85,000, and real property located at 3887 Cannon Lane, York PA 17408 (the “3887 Property”) for $86,000. On November 1, 2012 Debtor sold the 3887 Property to his brother through an installment agreement for $90,000. Under the terms of the sale, Debtor’s brother is obligated to make payments of $1200 per month, which includes principal and interest at 5.5 percent, until the balance is paid in full in June 2020.
Debtor filed the above-captioned Chapter 7 bankruptcy petition on March 8, 2014. Together with his bankruptcy petition, Debtor filed a schedule of exemptions (“Schedule C”) in which he claimed the 3587 Property, the 3887 Property, “funds in 2 checking accounts established from [DebtorJ’s workers compensation pay-out,” and the Ford F-150. All four items were claimed as exempt under 11 U.S.C. § 522(d)(ll)(E). Debtor did not 'disclose the installment agreement on his original schedule of executory contracts and unexpired leases (“Schedule G”), nor did he disclose the $1200 installment contract payment as part of his income (“Schedule I”).
On April 30, 2014, the Trustee filed an objection to Debtor’s exemption claim asserting that § 522(d)(ll)(E) did not authorize Debtor to exempt property that was the proceeds of a workers’ compensation claim. On May 22, 2014, Debtor responded to the Trustee’s objection asserting that the property could be exempted
II. Discussion
The primary issue in this case is whether property acquired through funds derived from a workers’ compensation settlement received pre-petition is “property that is traceable to ... a payment in compensation of loss of future earnings of the debtor ..., to the extent reasonably necessary for the support of the debtor and any dependent of the debtor.” 11 U.S.C. §, 522(d)(11)(E).
It is a well established principle that bankruptcy exemptions should be construed liberally in favor of debtors. See Bierbach v. Walck (In re Walck),
A. Workers’ compensation awards may be exempted under 11 U.S.C. § 522(d) (11) (E)
1. The In re Michael decision
The Trustee bases his objection on a decision rendered in 2001 by Judge Thomas in the case of In re Michael,
Because I am not bound by the In re Michael decision and other courts have reached a different conclusion than Judge
2. The plain language of 11 U.S.C. § 522(d)(11)(E)
“The starting point in discerning congressional intent is the existing statutory text[,].” Lamie v. U.S. Trustee,
Section 522(d)(11)(E) provides as follows:
(d) The following property may be exempted under subsection (b)(2) of this section:
(11) The debtor’s right to receive, or property that is traceable to—
(E) a payment in-compensation of loss of future earnings of the debtor or an individual of whom the debtor is or was a dependent, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor.
11 U.S.C. § 522(d)(11)(E).
Relying on § 522(d)’s legislative history
More recent cases, however have questioned the assumption that § 522(d)(10) and (d)(11) are mutually exclusive. In In re Holstine, 458 B.R. 392, 395 (Bankr.E.D.Mich.2011) aff'd, No. 11-14573,
In Sanchez, Judge Hopkins looked at the plain meaning of the statute and concluded that workers’ compensation awards may be exempted under § 522(d)(11)(E) if the award is traceable to a payment that is intended to compensate the debtor for the loss of future earnings and is reasonably necessary for the support of the debtor or the debtor’s dependents. Id. at 357. Although he also examined the legislative history, he determined that it was not helpful in resolving the issue. Further, he concluded that it was inappropriate to consult the legislative history when the text of the statute was unambiguous. Id. at 358. I agree with the conclusion of the Sanchez and Holstine courts that § 522(d)(11)(E) unambiguously exempts “a payment in compensation of loss of future earnings of the debtor,” including lump sum workers’ compensation payments, without restricting such payment to tort-type actions.
Workers’ compensation awards are given to offset a worker’s loss of future earnings as a result of a work-related injury. Montgomery Cnty. v. Deibler,
In contrast, § 522(d)(11) lists forms of compensation that often are paid in a lump sum and frequently are paid as compensation for losses. In re Holstine,
Finding the language of § 522(d)(11)(E) to be unambiguous and further finding no basis to conclude that (d)(10) and (d)(11) are mutually exclusive, it is unnecessary for me to consult the legislative history of § 522. Accordingly, I conclude that § 522(d)(11)(E) provides a basis upon which property traceable to a pre-petition lump sum workers’ compensation settlement awarded for the loss of future earnings to the extent that the lump sum is reasonably necessary for the support of a debtor and the dependents of a debtor may be claimed as exempt.
B. The Medicare “set aside”
’ In addition to the lump sum settlement of his claim, Debtor also received a lump sum as a Medicare “set aside.”
Here, part of Debtor’s workers’ compensation settlement was a Medicare “set aside” (“WCMSA”) payment. WCMSA is a “financial agreement that allocates a portion of a workers’ compensation settlement to pay for future medical services related to the workers’ compensation injury, illness, or disease.” The Center for Medicare and Medicaid Services provides that a claimant “can ONLY use [WCMSA] to pay for medical treatment or prescription drugs related to [his or her workers compensation] injury, and ONLY if the expense is for a treatment or prescription Medicare would cover. This is true even if [he or she] is not yet a Medicare beneficiary.”
Debtor’s settlement agreement established a trust for the benefit of medical providers. See 4 Collier on Bankruptcy ¶ 522.09[12], p. 522-79 (16th ed. rev. 2014) (“Though ostensibly belonging to the debt- or, medical payments are actually not the property of the debtor, but are held in trust for another.”) The agreement expressly states that:
... the parties to this settlement ... have determined that [Debtor’s need for future treatment from this claim is estimated to be $72,741.88, which amount is expressly allocated for [Debt- or]^ need for any future treatment, including prescription drugs.
Medicare interests in this settlement have been considered and the parties specifically recognize that the purpose of this settlement is not to shift to Medicare any responsibility for this payment of medical expenses related to the treatment of [Debtor]’s work-related eondition incurred on 11/2/2010, until the amounts held in the Medicare Set-Aside is completely expended or the account depleted ...
Tr. Ex. “A.”
The express intent of the settlement agreement was to create a fund from which Debtor was to pay for his medical treatments and prescription drugs related to his work-related injury. Even though the agreement does not specifically state that Debtor is to hold the funds as trustee for the benefit of his medical providers, no such words are needed in order to create an express trust. See Sieling,
C. Property necessary for the support of Debtor and his dependents
The final issue is whether the property or funds traceable to Debtor’s workers’ compensation settlement are necessary for the support of Debtor and his dependents. To make this determination, I have to consider: 1) debtor’s present and anticipated living expenses; 2) debtor’s present and anticipated income from all sources; 3) the age of debtor and his dependents; 4) the health of debtor and his dependents; 5) debtor’s ability to earn a living; 6) debtor’s job skills, training and education; 7) debtor’s other assets, including exempt assets; 8) the liquidity of other assets; 9) debtor’s ability to save for retirement; 10) the special needs of debtor and his dependents; and 11) debtor’s continuing financial obligations, such as alimony or support payments. In re Comp,
The Trustee asserts that even if Debtor is entitled to exempt the lump-sum payment under § 522(d)(11)(E), he has failed to show that the funds were reasonably necessary for Debtor’s support. Rather than using the funds to pay his expenses, Debtor used the funds to purchase two parcels of real property and a truck. Converting the funds into real and personal property, however, does not mean that the funds were not necessary for the support of Debtor and his dependents.
Further, there are numerous other factors that support a finding that the pro
Considering all of the above-mentioned factors, the evidence provided weighs in favor of exempting all proceeds from the settlement agreement and all property acquired with these proceeds under 11 U.S.C. § 522(d)(ll)(E).
III. Conclusion
For the reasons set forth above, the Trustee’s objection to Debtor’s exemptions under 11 U.S.C. § 522(d)(11)(E) is overruled. An appropriate order will follow.
Notes
. This Court has jurisdiction pursuant to 28 U.S.C. §§ 157 and 1334. This matter is a core, non-Stern proceeding pursuant to 28 U.S.C. § 157(b)(2)(A) and (B). This Opinion constitutes findings of fact and conclusions of law made pursuant to Federal Rule of Bankruptcy Procedure 7052 made applicable to contested matters by Rule 9014.
. The legislative history of § 522(d)(10) and (11) states the following:
Paragraph (10) exempts certain benefits that are akin to future earnings of the debt- or. These include social security, unemployment compensation, or public assistance benefits, veteran’s benefits, disability, illness, or unemployment benefits, alimony, support, or separate maintenance (but only to the extent reasonably necessary for the support of the debtor and any dependents of the debtor), and benefits under a certain stock bonus, pension, profitsharing, annuity or similar plan based on illness, disability, death, age or length of service. Paragraph (11) allows the debtor to exempt certain compensation for losses. These include crime victim's reparation benefits, wrongful death benefits (with a reasonably necessary for support limitation), life insurance proceeds (same limitation), compensation for bodily injury, not including pain and suffering ($10,000 limitation), and loss of future earnings payments (support limitation). This provision in subparagraph (d)(ll) is designed to cover payments in compensation of actual bodily injury, such as the loss of a limb, and is not intended to include the attendant costs that accompany such a loss, such as medical payments, pain and suffering, or loss of earnings. Those items are handled separately by the bill.
H.R. Rep. 95-595, 362, 1978 U.S.C.C.A.N. 5963, 6318.
. No reported decision, other than In re Michael, held that the proceeds of a lump sum workers’ compensation award received pre-petition may not be exempted under either § 522(d)(10)(C) or § 522(d)(11)(E).
. Medicare is not the primary payer of medical expenses covered by other forms of insurance such as state government workers’ compensation plans. See 42 U.S.C. § 1395y(b). The purpose of a set-aside arrangement is to allocate a portion of a workers' compensation settlement to pay the future medical expenses related to the work-related injury for which Medicare would have secondary liability. Workers' Compensation Medicare Set Aside Arrangements, Center for Medicare & Medicaid Services, http://www.cms.gov/Medicare/ Coordination-of-Benefits/Workers-Compensation-Medicare-Set-Aside-Arrangements/WCMSAP-Overview.html (last visited Dec. 11, 2014).
. Maryland law governs here because the Agreement of Final Compromise and Settlement was entered into in the state of Maryland.
. Self Administration Toolkit for Workers' Compensation Medicare Set-Aside Arrangements, Center for Medicare & Medicaid Services, http://www.cms.gov/Medicare/ Coordination-of-Benefits-and-Recovery/ Workers-Compensation-Medicare-Set-Aside-Arrangements/Downloads/Self-Administration-Toolkit-for-WCMSAs.pdf (last visited Dec. 11, 2014) (emphasis in the original).
. As this issue was not before me, this opinion does not address whether some of the medical service providers listed as creditors in Debt- or's schedules may have rights in the WCMSA as beneficiaries of the trust.
. The Trustee argued that Debtor used the WCMSA to purchase a Ford F-150. Whether or not Debtor may have misused the WCMSA funds is not before the Court. In any event, these funds are not property of the estate.
.Debtor's schedules also report that he held two checking accounts with $24,000 from the settlement agreement payment on the date the petition was filed.
. The reported income includes the monthly payments of $1200 that Debtor receives from his brother.
. 2014 Poverty Guidelines, Office of the Assistant Secretary of Planning and Evaluation, http://aspe.hhs.gov/poverty/14poverty.cfm (last visited Dec. 11, 2014).