Your employer is responsible for compensating you for lost wages and paying your medical bills when you hurt yourself at work. But, workers’ comp claims can be complicated. Many times what you are entitled to may not be clear-cut. And, your employer may claim that you’re entitled to a lot less than you think you are—or to nothing at all. So, how can you tell if a settlement offer is a good one? Below, we explain some of the issues you should consider before agreeing to a settlement.
Why Should I Settle?
A settlement is a voluntary agreement between you and your employer, or its insurance company, in which you agree to resolve your workers’ compensation case in exchange for a certain amount in benefits.
There are several advantages to settling your case. It brings an end to the dispute, ensures that you will receive at least a certain amount of money, and puts money in your pocket right away. If you don’t settle, you will need to go to a workers’ comp hearing. Going to a hearing presents some risks, as you might receive less than what the insurance company offered or you might receive nothing at all. In fact, only about 51% of our readers reported receiving an award after a workers' compensation hearing.
Unlike a settlement, a hearing is not necessarily a final ending to your case. Even if you win at the hearing, the insurance company has the right to appeal. The insurance company typically won’t be required to pay the award until the appeal is decided, which could be another year or two away. By settling the case, you may not get as much as you want, but you end the case and receive your money now. (For more on the pros and cons of settlement, see Should I Settle My Workers’ Compensation Case?)
How Are Medical Expenses Handled?
Any settlement that you enter into should take your unpaid medical bills into account. If you have a lawyer, make sure he or she knows about any bills for medical treatment that have not been paid yet. The settlement agreement should state that all unpaid medical bills will be paid by the insurance company.
The settlement should also address your future medical treatment. The insurance company may require you to close out future medical treatment as a condition of the settlement. This means that you would be responsible for paying for your own medical treatment after the settlement. In a minority of states, workers are not allowed to waive their right to future medical care as part of a settlement. In those states, the insurance company must continue to pay for medical care even after the settlement.
You should think carefully before waiving your right to future medical care. If you have personal health insurance, or health insurance through your employer, don’t assume that your treatment will be covered; many plans specifically exclude coverage for work-related injuries.
If your condition is stable, you’re back at work with no restrictions, and your doctor sees no need for further treatment, then it is probably fine to close future medicals. On the other hand, you may want to keep future medicals open if you have any residual pain, permanent work restrictions, an ongoing need for treatment or medication, or a significant possibility that you’ll need surgery or other treatment in the future.
How Much Should I Receive?
Whether a settlement offer is a good one depends on many factors, including whether you have a permanent disability, the degree of your permanent disability, whether you can return to your regular job, and whether the insurance company has a legitimate reason to limit payout on your claim (for example, there is evidence that you had a preexisting condition that contributed to your injuries).
The settlement amount should cover all benefits to which you might be entitled. These benefits include temporary disability benefits (to the extent that the insurance company failed to make any payments while you were off work), permanent disability benefits (if you have a permanent impairment as a result of your injury), vocational rehabilitation benefits (if you can’t return to your job and need to train in a new line of work), and any penalties or interest if the insurance company failed to pay your benefits on time. In general, though, permanent disability benefits usually make up the bulk of the settlement amount.
The settlement can be an agreement to pay a weekly or monthly amount, or if your state allows it, you can agree to receive a lump sum. A lump sum is usually more attractive to the insurance company, which would rather give you one check than have to continue to send you a check every week or so for several years. (For more on options for structuring your settlement, see Settling Your Workers’ Compensation Claim.)
How Will the Settlement Affect My Social Security Disability Benefits?
If you are receiving Social Security disability benefits at the time of the settlement, or expect to become eligible for Social Security disability soon after the settlement, your settlement agreement should contain terms that limit any offset that you might receive. In some cases, social security disability benefits will be reduced to account for your workers' comp benefits, if your combined benefits exceed a certain threshold. An experienced workers’ comp lawyer will know how to handle this in the settlement agreement. (For more on social security disability offsets, see Will My Workers' Compensation Benefits Be Taxed?)
Should I Consult With A Lawyer?
Before signing a settlement agreement, you should have it reviewed by a workers’ compensation lawyer. A lawyer will be able to assess whether the settlement amount is fair, given the degree of your impairment and your state’s rules on calculating permanent disability awards. A lawyer can also make sure that the settlement is structured in a way that makes sense for your long-term needs. And, a lawyer can make sure that you don’t unwittingly waive your rights to any other potential claims that you might have (for example, a claim against a third party).
Once you sign a settlement agreement and accept the money, you have given up the right to pursue your claim. If the settlement money runs out, you won’t be able to go back for more. Because you’re giving up significant rights, you should always consult with a workers’ compensation attorney before signing any settlement agreement.