After being injured on the job, you are eligible to receive workers’ compensation to help pay for any medical expenses and for time lost due to the injury. You can then choose to accept a workers’ compensation settlement as a lump sum, or choose to not settle and receive weekly payments, instead.
What is Workers Compensation?
A workers’ compensation settlement is a contractually binding private agreement between the injured employee and the other party. In these agreements, the injured employee agrees to forego legal action in favor of receiving money instead.
While these settlements can seem tempting, you need to carefully weigh your options. Often it is a wise idea to consult a lawyer to help make this decision.
Weekly Payments vs. Lump Sums
When you are injured on the job, you have two options: you can agree to receive weekly payments or a lump sum payment for a settlement.
Receiving the money through weekly payments is exactly what it sounds like—you receive an allotted amount of money each week to help pay for costs associated with the injury.
Another option is receiving your compensation through a lump sum payment, which is when you agree to settle with the company and receive all the money at once in one large check.
Pros and Cons to Accepting a Settlement
✓ Pro of a Lump Sum: You know with absolute certainty the total amount of money you will receive. There is no waiting on weekly checks or dealing with insurance companies and the necessary paperwork associated with these payments. Furthermore, if you settle, there’s no need to worry about going to court either.
✘ Con of a Lump Sum: Once you’ve accepted a settlement, you can’t change your mind later on. This means that if your injury unexpectedly escalates, you are not liable to receive further funds. Also, receiving a lot of money at once sounds great as you can finally make that big purchase. However, once your funds are depleted, you’re out of luck.
✓ Pro of Weekly Payments: You can rest assured that you will receive money each week to pay for your injuries and you can feel confident that if your injury escalates and you need more money, these weekly payments can adjust to cover those costs.
✘ Con of Weekly Payments: If you don’t accept a settlement, you have to rely on the fickleness of the court and the insurance company. Depending on the insurance company and state laws, the insurance company can constantly seek to prove you no longer need workers’ compensation. There is no way to know how much money you will receive. Furthermore, you have to constantly deal with the hassle of the court and insurance companies.
All this back and forth would be worth it, however, if you think your injuries might escalate or are not pleased with the workers’ compensation settlement amount offered to you.
The Three Different Types of Workers’ Compensation
Disabled employees are entitled to receiving monetary compensation. However, the duration of these benefits differs in every state and depends on what classification you fit under. There are three main categorizations:
Workers’ CompensationPermanent Partial Disability
This type of payment occurs when an injured worker has received all the medical treatment that can be used to improve or heal the injury. Once a doctor has determined that the worker’s injury is at maximum medical improvement, the doctor will prescribe a disability rating to the body part injured from the accident. The payment will be dictated as to the percentage of the body part that is considered disabled. It could be a lump sum payment or a weekly payment. If weekly, benefits will continue as long as the law dictates. In these cases, a settlement might not be a bad idea.
Workers’ Compensation Temporary Total Disability
This occurs when the employee completely loses all ability to earn wages. The person is still eligible to receive payments if they cannot return to work at all. But, these payments are only eligible until the physician states you can go back to work light duty or back to full duty work.
Workers’ Compensation Temporary Partial Disability
This is when the employee does not lose all ability to earn wages, but his or her ability to do so is negatively impacted for a short period of time. Different states have different rules. However, the payments may be less than the Temporary Total Disability payments.
How to Calculate Workers’ Compensation Settlements
In order to calculate your workers compensation settlement, you first need to know your base wage or your average weekly wage. (Note: this is handled differently in each state)
Then you need to figure out what’s called the benefit rate for your Temporary Total Disability. This is the percentage of the base wage/average weekly wage. You will be entitled to this amount as long as you stay out of work, pursuant to your doctor’s opinion.
With these numbers in mind, it’s time to consider your injury. Different injuries are liable for varying amounts of weekly payments. In addition, you will need to know what percentage of disability is assigned to that injury. Then you need to multiply the percent of disability with the amount of your weekly payments that you are liable to receive. This will provide you with a Permanent Partial Disability amount.
The amount of time that you are considered to be out of work plus the amount of your Permanent Partial Disability will be a baseline of the monetary benefits you are due in a settlement.
As you can see, there are several factors to keep in mind. The one factor that makes the difference between an excellent workers’ compensation attorney and an average one is somebody who knows when to take the settlement and when to rely on the weekly payments. So choose your attorney carefully.
Lastly, when it comes to receiving medical treatment, in emergency situations make sure to get it right away and to keep records as accurate as possible. When it comes to workers’ compensation, you want everything documented and ready to turn over to the court or to the insurance companies.