What Is a Workers’ Compensation Settlement? How Does It Work?
When you’ve been injured on the job, you usually have the right to seek workers’ compensation benefits. In most instances, approval of your claim entitles you to regular payments for a period of time, which varies based on the seriousness of your injury and whether the injury is temporary or permanent.
In some instances, though, the workers’ compensation insurance company may offer you what’s known as a “settlement.” In Pennsylvania, workers’ compensation settlements typically are referred to as “compromise and release” agreements. In essence, a settlement requires that you permanently withdraw your workers’ compensation claim in exchange for some type of cash payment. In most instances, the offer is for a lump sum payment, but under certain circumstances the insurer may be willing to set up a “structured” settlement that’s paid out over time.
With a lump-sum payment, the insurance company determines the “present value” of the total amount of payments to which you’d be entitled if you opted for periodic payments instead of a lump sum. In other words, the insurance company assumes a rate of return on the lump sum and reduces the total amount by that rate. The calculation process can be complicated, so if you’re offered a workers’ compensation settlement, it’s important to have an experienced attorney advising you.
It’s important to understand a couple of other things about accepting a workers’ compensation settlement:
- It typically applies only to the cash compensation to which you are entitled. If you take a lump sum, you won’t be entitled to any further payments. However, you’ll still be entitled to medical coverage through the workers’ compensation claim, unless your employer makes termination of medical benefits a condition of settlement.
- You won’t have to return any money if you are able to go back to work. With periodic payments, you may lose some of your eligibility if you return to work. With a settlement, that’s typically not the case.
Contact Barnard, Mezzanotte, Pinnie, Seelaus & Kraft LLP
At Barnard, Mezzanotte, Pinnie, Seelaus & Kraft LLP, we have protected the rights of personal injury victims in Pennsylvania since 1980, including individuals with wrongful death claims. We offer a free initial consultation. To schedule an appointment, call us at 610-565-4055 or 302-594-4535 or contact us online.
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