Getting injured at work may mean that you have a long-term or permanent disability. Workers’ compensation insurance covers this possibility by paying a portion of your lost wages while you can’t work. However, you may be offered a workers’ compensation settlement if the injury is expected to last for an extended period. This settlement is a dollar amount based on your injury, time expected off of work, and degree of permanent disability.
Employees need to understand how workers’ compensation settlements work because once you accept a settlement, your case is closed. You can’t go back to the workers’ comp insurance carrier and try to get more benefits.
Understanding the Workers’ Compensation Settlement Process
When you have a workers’ compensation claim, your employer’s insurance carrier wants to get the matter closed as quickly as possible because this saves money in the long run. To do this, the carrier may offer you a workers’ compensation settlement based on its data about your injury and its long-term effects, including how much time off of work the injury usually causes.
As the employee, you likely have only a certain amount of time to accept or decline the settlement offer. Accepting the carriers’ settlement offer means you will receive payments, and your case will be closed. If you refuse the settlement, you will continue to receive workers’ comp benefits, and your case will be reevaluated at regular intervals to determine if it can be closed. When no settlement is reached, the courts often become involved to determine final restitution for the injury.
A workers’ compensation settlement is not a way for insurance carriers to short-change injured workers—although this can happen if employees are not vigilant in understanding their rights. Carriers are obligated to pay reasonable medical costs and disability benefits but can have a different view of what that means.
What Workers’ Compensation Settlements Cover
As mentioned, insurance carriers take a lot of factors into consideration to make a settlement offer. Essentially, the settlement needs to cover all aspects of the claim, such as:
- Medical costs already absorbed and the expected future medical costs
- Total of lost and potentially lost wages
- Total disability payments
- Vocational rehabilitation for those whose injuries cause permanent disabilities
- State rules and regulations
- Legal fees
Evaluating future losses can be difficult, so injured employees often enlist an attorney to help negotiate a fair settlement. Say, for example, the insurance carrier looks at your medical records and determines you should only receive disability benefits for six weeks. An experienced attorney may use historical examples of similar injuries to argue for a larger payout.
Types of Workers’ Compensation Settlements
There are two types of workers’ compensation payouts: lump-sum paid settlement and structured settlement. The lump-sum payout means that you get one check that covers all anticipated costs associated with your injury. A structured settlement is like getting an annuity—you and the carrier negotiate the total settlement amount that’s then divided up over an agreed-upon time. Typically, you receive a monthly check during that time.
State Rules Governing Workers’ Compensation Settlements
Being offered a settlement may be contingent on state laws and rules. Not all states allow settlements because they don’t want to accidentally limit the care an injured worker gets in a claim. Other states allow workers’ compensation settlements but maintain a provision that prevents fully settling medical payments. The idea is to make sure that the injured worker can get care later on for the injury should a complication arise.
Generally, settlements that come out of a legal proceeding require a judge to review the settlement to be sure that it is fair and reasonable. The states that err on the side of caution when it comes to settlements do so to protect the injured worker’s interests. States don’t want someone to sign a final settlement and walk away from avenues of recourse if they don’t have to.
Should You Accept the Insurance Carrier’s Offer?
Accepting or refusing a settlement offer can feel overwhelming. Often, there are major dollars involved, and you are particularly vulnerable to being injured and out of work. A large check of any amount can seem like a blessing. However, before you agree, consider the pros and cons of accepting the settlement.
Pros and Cons of Accepting Workers’ Compensation Settlements
Payout can be for less than you’re owed
No more paperwork to deal with
Right to future benefits often waived
No questions about how money is spent
Large, unchecked payout may encourage poor habits
In the end, you should weigh the pros and cons of the settlement. If you feel that you are getting everything you are entitled to from the insurance company, a settlement is a good idea. But if you are unsure about future medical bills and don’t want to waive your rights to future benefits, you might want to hold off on accepting.
Should You Hire a Workers’ Compensation Lawyer?
When you are unsure about accepting a settlement, it might be wise to get help from an attorney. Keep in mind that while a lawyer negotiates the settlement for you, he or she also takes a piece of the settled amount rather than charging you to represent your case. Attorneys often pay for themselves because they can get much higher settlement amounts.
While most state laws say that employees cannot sue their employer if they have workers’ compensation insurance, you are entitled to legal representation if you feel your settlement offer is for less than your injury warrants.
A settlement is a fairly common way to end a workers’ compensation claim, but that doesn’t always mean it’s the best choice for you. Employees are under no obligation to accept an insurance carrier’s offer, so be sure to consider your current condition and prognosis before you agree to any settlement.