When pursuing a workers’ compensation claim, you have a number of options available to you. You can pursue the claim, as you normally would, or you can opt to take a settlement offer in one lump sum. Accepting a settlement may seem like a good idea, particularly if you need the money sooner rather than later, but it’s important to understand what that means. There are consequences to taking a lump sum payment and you should know how they will affect your future.
1. Weekly Benefits Will Cease
Once you accept a lump sum cash settlement on your workers’ compensation claim, you will no longer receive weekly payments. The settlement is for the injury for which you filed workers’ compensation, so, by accepting it, you are closing that part of your case. Essentially, the settlement is your total weekly benefits issued at once, so you may want to consider if it’s really worth it. Ask yourself how much less the settlement offer is, as opposed to the total you would have received in weekly benefits. Also, will you be able to conserve that money as your only source of income, or are you the type that spends easily?
2. Medical Benefits
Is the insurance company going to continue to pay medical expenses, following the settlement? This is something that can change from state to state, so check your own state laws to be sure. In some states, the insurer is required to continue paying medical benefits, while other states allow insurers to stop medical benefits upon the signing of a settlement.
Additionally, insurers may still drag their feet in paying medical expenses, even in cases where they’re required to do so. The settlement is viewed as an easy way out, so insurers may use that as an excuse to stop paying benefits, even when they’re required to do so.
3. Settlements are Still Subject to State Approval
Suppose you agree to the settlement and both you and the insurer are happy with the terms. It still has to be approved by the state workers’ compensation board and, upon review, the board often rejects the settlement. The reasons for this are varied. Primarily, the board’s concern is that you signed the settlement voluntarily and that the settlement is in your best interests. If the workers’ compensation board feels the sum is low or that you didn’t fully understand the terms of the settlement, the state reserves the power to deny the settlement.
You can help yourself in this area by ensuring that you understand how workers’ compensation sums are calculated. Many people assume this type of claim is similar to a personal injury civil suit, wherein pain and suffering is factored into the sum for damages. This is not so in a workers’ compensation claim.
Two factors are considered in determining how much a worker should receive for his injuries.
1. The total sum of workers’ compensation benefits you’re entitled to in the future.
2. The chances that you’ll receive those benefits.
This determination is based on the extent of your injuries and the length of time, before you can return to work. For instance, it may be estimated that you’re entitled to temporary total disability benefits for a period of two years. If the lump sum offered comes to less than the total amount for those two years, it wouldn’t make sense to take the cash settlement.
4. What About Permanent Total Disability?
Determining your settlement value is more difficult in this case, because it’s necessary to factor in your weekly benefits for decades to come. Using present value, you must determine the total sum needed to pay your weekly benefits over the next 20 or 30 years. Again, if the settlement offer is less than this sum (and it probably is), signing off on a settlement could be a very costly mistake.
The above examples don’t factor in the cost of hiring a workers’ compensation lawyer. In some circumstances, that may not be necessary and, as the fees for the attorney are deducted from benefits, it may not be worth doing. However, in situations such as that suggested in the case of permanent total disability, the attorney’s fees may not be a high price to pay to ensure you’re getting the most possible benefits for your situation.