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Different Types of Settlements in Workers’ Comp Claims

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Workers’ compensation benefits exist to help injured employees manage their medical expenses and lost wages after suffering on-the-job injuries. Every state has unique laws for workers’ compensation, including which employers must maintain insurance coverage. When an employee suffers a work-related illness or injury, he or she may then file a claim to manage the financial issues resulting from the accident. Settlements fall into one of three main categories:

Lump Sum Settlements

Also called a commutation settlement, a lump sum settlement provides an injured employee with one payment to cover all existing and future medical costs arising from the work-related injury. These settlements require the employee to waive rights to future benefits stemming from the same injury and instead aim to settle the matter with one large payment.

Compromise and Release Settlements

With these settlements, injured employees accept the settlement payment as full coverage for their claim. This also precludes employees from seeking future benefits for the same issue or seeking additional compensation for a claim. In some situations, an injured employee may attempt to sue his or her employer if workers’ compensation does not fully cover the associated costs of an injury. Compromise and release settlements generally contain verbiage restricting the employee’s future options for seeking benefits in exchange for a speedy lump settlement.

Structured Settlements

Similar to compromise and release settlements, the injured employee must waive any right to future benefits by accepting a structured settlement. The main difference between a structured settlement and a compromise and release settlement is that instead of one lump sum payment, the injured employee will receive smaller settlement payments over time on a structured schedule. This is common for employees who require long-term medical coverage due to their injuries.

What Does Workers’ Compensation Cover?

After a work-related injury, an injured employee could face financial problems without workers’ compensation benefits. The aim of workers’ compensation is to provide employees with coverage for their losses after an on-the-job accident, which may include:

  • Medical expenses. The employee can claim coverage for emergency medical transportation (such as an ambulance or helicopter transportation), hospital bills, prescription medication, physical therapy, rehabilitation, and any other necessary medical expenses resulting from the work-related injury.
  • Disability coverage. If an injury leads to permanent disability or a long-term medical condition, the employee may claim coverage for the costs of treating these conditions as well as the employee’s hindered ability to work.
  • Lost income. An injury may prevent an employee from returning to work for some time, and a workers’ compensation claim can cover the wages lost in that time.

It’s vital for any injured employee to know their options for workers’ compensation benefits after a work-related accident. An attorney can be a tremendous asset and help navigate the claims process as well as assist with insurance issues or even personal injury claims against negligent employers. An attorney can also help an injured employee determine the best type of settlement to take.