If a work-related injury or illness has made it difficult or impossible for you to work, you might be eligible for permanent disability benefits from your employer's workers' comp insurer. Workers' compensation is a no-fault system, meaning you can receive benefits even if the injury or illness wasn't your employer's fault.
If the workers' comp insurer offers you a settlement for your injuries, you have a few options:
Before accepting a workers' comp settlement, you should understand how they work, what they include, and how they're structured.
In most states, you can negotiate a settlement that will provide you with a lump-sum of money rather than continuing weekly permanent disability payments. The settlement may also include an amount for future medical care, as well as money the insurer owes you for overdue temporary disability benefits and unreimbursed medical expenses.
You can also negotiate an agreement for a structured settlement that will provide you with payments over a period of time. In these settlements, you don't need to give up all of your future rights to medical care.
There are lots of good reasons to accept a workers' comp settlement rather than requesting a workers' comp hearing before a judge. For starters, the judge could decide that you're entitled to less money than what the insurance company offered you. Although this is fairly unusual, it does happen. Many people choose to take the guaranteed money rather than risking it.
Here are a few other reasons people accept workers' comp settlements:
Agreeing to a settlement also carries some potential pitfalls. For instance, lump-sum settlements can quickly disappear if they're not managed carefully. A schedule of weekly payments might be a better option for those who aren't adept at managing money.
Giving up your right to future medical treatment as part of a settlement can also be risky. This is especially true if you're likely to need surgery or expensive medication in the future.
Consider whether each of the following types of benefits should be a part of your settlement.
You don't have to be completely unable to work in order to receive permanent disability benefits through workers' comp. If your injury permanently limits your ability to work, you'll probably be eligible for permanent partial disability (PPD) benefits. For example, if you lost a finger or hand in a workplace accident, you'd probably qualify for PPD. And even if you aren't restricted in any way from your injuries, you can ask for compensation for permanent scarring and disfigurement.
Some states have different rules for calculating benefits when employees are totally disabled as a result of their injury, or they have a PPD rating above a certain percentage. Often, the employees may receive life pension awards in addition to permanent disability payments.
If you have total permanent disability, you shouldn't try to handle settlement negotiations on your own. The calculations are complicated, and the consequences are serious when you're facing a lifetime of needs without income. You need to hire a workers' comp lawyer to protect your rights and your future.
Before settlement negotiations begin, the insurance company should send you what's known as a permanent disability rating. That rating can then be converted into the amount of benefits you're owed under state law. In California, for example, if you have a 40% permanent disability rating, the insurance company will owe you 280 weeks of PPD payments at two-thirds of your average weekly earnings, with minimum and maximum amounts that change regularly.
The insurance company may use your rating to come up with a starting settlement amount, but you may want to ask for a moderately higher amount for permanent disability compensation, plus the cost of future medical treatment and any past-due temporary disability benefits.
If the insurance company didn't pay you the right amount of temporary disability (wage loss) benefits while you were off work and recovering—or just didn't make some payments—your settlement should include the balance that the company owes you.
Many states require a penalty for late payments (calculated as a percentage of the past-due amount). That penalty can add up to a lot of money, so you should consult with a lawyer if the insurance company paid you too little or too late.
The settlement should include any unpaid bills for past medical treatment. As for future medical costs, there are two different ways of dealing with them.
One option is to agree on a disability payment amount with the insurer while preserving your right to have the insurance company pay for your future medical treatment.
The other option is to settle on a lump-sum payment for future medical treatment, in return for giving up your right to have the insurer pay those bills when they come up. Note that some states don't allow employees to legally waive that right. In those states, employees can always go back to the insurance company to get reimbursed for any medical treatment for the work-related injury or illness.
The wording of the settlement can be important to protect your right to other types of benefits in the future, including Social Security disability benefits. In some cases, those benefits could be reduced if your workers' comp settlement isn't worded in a certain way. If you're in this situation, be sure to hire a workers' comp attorney to navigate this potentially thorny issue.
Also, before you sign any settlement agreement, make sure you know the answer to these two questions:
Most states require a workers' comp judge must to review your settlement before it becomes official. This will take place at an informal conference. If you're not represented by a lawyer, the judge may attempt to make sure the settlement is fair to you.
Negotiating and structuring a workers' comp settlement can be tricky. Unless your permanent disability is rated 10% or less, you should strongly consider speaking to a workers' comp lawyer about your options for settlement and what a fair amount would be for someone with your medical impairments.