At some point in your workers’ compensation case, you might receive a settlement offer from your employer or its insurer. Apart from the amount of money being offered, you will also want to understand the other terms of the settlement. For example, will you receive a one-time payment or weekly benefits? Will your future medical care be covered? How long does the insurance company have to pay the settlement? This article explains the answers to these questions and more.
Types of Settlements
The types of settlements that are available in your workers’ compensation case vary greatly from state to state. Some of the common settlement options are described below. However, some states may allow combinations of these types of settlements, not allow a certain type of settlement, or have additional settlement options.
In a structured settlement, benefits are paid over time rather than in one lump sum. Structured settlements can often be tailored to meet the needs of the injured worker. For example, payments can be made on a weekly or monthly basis, annually, or at some other interval. Payments can also be scheduled to increase over time, to account for inflation. And, if a worker has outstanding bills or other immediate needs, the settlement can include a sum of money to be paid up front in addition to the periodic payments.
Structured settlements are more commonly used with workers who have suffered severe injuries and have long-term needs. A structured settlement ensures that the worker will receive a steady stream of income into the foreseeable future. The interest on the settlement funds typically accrues tax-free, which means the worker may receive more funds than if he or she were to accept a lump sum.
In some cases, structured settlements come with the right to future medical treatment. For example, in California, the parties can agree to a type of settlement called a “Stipulations With Request for Awards,” where the insurance company agrees to pay a weekly installment payment and pay for any future medical care. However, in other cases, the parties may agree to a structured settlement that is final and doesn’t include the right to future medical care. In these cases, the estimated value of any future medical treatment should be calculated into the installment payments.
A lump-sum settlement is a one-time payment that compensates the injured worker for any outstanding past and future benefits owed. In most cases, a lump-sum settlement is part of a “Compromise and Release,” where the worker agrees to release all claims in exchange for the one-time payment. This typically means giving up the right to future medical care. For that reason, the cost of any future medical treatment should be factored into the lump-sum settlement.
Insurance companies often won’t consider leaving future medical costs open because they would rather close out cases for good. However, a minority of states make it illegal for a worker to waive the right to future medical care in a settlement. In these states, insurance companies must pay for future medical treatment related to the work injury.
Many workers opt for the lump-sum settlement because it gives them immediate access to a larger sum of money, rather than waiting for smaller payments over time. This option may be more advantageous for workers who have fully recovered, won’t need much future medical care, and can still work and earn a living.
In most states, any settlement that you agree to will need to be approved by the state workers’ compensation agency. This is typically done at an informal hearing before a workers’ comp judge or hearing officer. The judge or hearing officer will review the settlement to make sure that it fairly compensates you and will ask you to confirm that you fully understand what you’re getting and what you’re giving up.
Once your settlement is formally approved, the judge will issue an order, which includes the deadline by which the insurance company must pay the lump-sum or the first installment payment. The time limits vary from state to state, but are often around 30 days from the judge’s order. If your payment is late, you may be able to receive interest or penalties, or both.
If your employer or its insurance company has made a settlement offer, you should consult with a lawyer before signing a settlement agreement. Once you sign away your rights, it can be difficult, if not impossible, to undo the agreement. A workers’ compensation lawyer will be able to accurately calculate the value of your claims and tell you if you’re getting a fair deal.