In Pennsylvania, employees seeking workers’ compensation may be offered a structured or lump sum settlement. But what does this mean, and what are the benefits of one over the other? Munley Law explains structured vs lump sum settlements in Pennsylvania workers’ compensation.
Workers’ Compensation Structured Settlement
When an injured worker chooses a structured settlement or annuity for workers’ compensation benefits, they agree to payments over a period of time rather than a one-time payment. These payments are often given weekly, bi-weekly, or monthly until the full settlement has been granted.
In some rare cases, these payments may be spread out for years until the recipient’s retirement or death; however, such a plan would require guidance from a Pennsylvania workers’ compensation lawyer.
If the injured employee has long-term medical expenses due to the injury, the employer’s insurance company may also include payments for these future medical expenses.
Advantages of a Structured Settlement Agreement
For many injured workers, a structured settlement offers more advantages over a lump sum payment. Weekly or otherwise spaced payments provide some financial security to the employee, who may be the sole income provider in a household.
Further, this option may save you money over time since the payment is tax-free. Because these payments are often in annuities, they can grow over time with investments. Employers save money and avoid tax implications with structured settlements because of the annuities, and usually prefer this.
Disadvantages of a Structured Settlement Offer
There are disadvantages to using a structured settlement, though. If you suffered serious injuries and have significant amounts of debt, it can take you longer to pay off when you are utilizing a structured settlement. Should you pass away before all payments are made, your family will not continue to receive payments unless that was negotiated in the terms of your settlement as well.
If you opt to change from a structured settlement to a lump sum payment, you cannot sell your annuity for cash, making it crucial to pick the correct form of compensation the first time. Finally, injured workers need to know that if the employer or the employer’s insurance company responsible for your payments goes out of business, you will not be guaranteed to receive payments.
Pennsylvania Workers’ Compensation Lump Sum Settlement
Lump sum settlements are one-time payments based on your expected medical costs and lost wages. This includes whether you have reached maximum medical improvement and can return with or without workplace restrictions, which impacts your wages. When you agree to a lump sum settlement, you also agree not to pursue more compensation even if future expenses occur.
Advantages of a Lump Sum Settlement
A lump sum settlement can be advantageous for injured workers with other forms of income, especially if they have significant upfront expenses. Further, by taking the lump sum payment, you can invest your compensation as you want to have a steady stream of income or savings for the future. Further, by taking the lump sum settlement, you know you’ve closed out your workers’ compensation claim and do not have to worry about getting the money that is rightfully yours should something happen to the business or insurance company.
Disadvantages of a Lump Sum Settlement
By agreeing to a lump sum settlement, you may receive less compensation than you would have in a structured settlement. Additionally, by taking the lump sum settlement, you risk not getting other forms of government aid, such as disability and Medicaid. If your medical condition worsens because of the injuries and your benefits are gone, you’re on the hook for your future medical care. Finally, this lump sum settlement can cause tax problems you may not have planned for.
What Is the Compromise and Release Agreement?
When you select a lump sum settlement, you sign a compromise and release agreement. This agreement releases the employer’s obligation to you for future legal action related to the injury. This means that by taking the lump sum settlement, you cannot seek more money for your work-related injuries, even if the full extent of the damage has not been realized.
Damages in Structure vs. Lump Sum Settlements in Pennsylvania Workers’ Compensation
Whether you pick a lump sum payment or a structured settlement agreement, the types of damages you recover are the same. Under Pennsylvania workers’ compensation, you are entitled to compensation for wage-loss benefits of approximately two-thirds of your average weekly wage, medical expenses, and benefits for permanent injuries or specific losses.
If a loved one dies due to their work-related injuries, the family is also entitled to death benefits under the Act. Sometimes, a structured settlement agreement will allow the remaining workers’ comp benefits to be paid, but this must be stipulated.
Contact an experienced Pennsylvania workers’ compensation lawyer immediately to begin recovering workers’ compensation death benefits. The deadline to apply for wrongful death is three years from the date of death, so long as it occurred within 300 weeks of the work-related injury or illness. If your initial claim is denied, immediately contact a lawyer, as an appeal is possible.
How To Pick the Right Workers’ Comp Settlement Agreement
Many factors can impact which settlement agreement is right for you and your family. While only you can make this decision, a Pennsylvania workers’ compensation attorney can guide you through the pros and cons of structured vs lump sum settlements. It’s essential to consider the following before agreeing to payment:
- What is your overall financial situation?
- What are your spending habits?
- How is your health, and what are your long-term medical needs?
- Are you able to return to work?
- Do you have a permanent total disability?
- What debts do you have to pay off first?
- Do you want your workers’ compensation case to be closed soon?
- Is your employer in a safe financial spot where you aren’t worried about future payments?
Once you can honestly answer these questions, you’ll better understand what type of settlement is right for you.
Settlements Are Final for Injured Workers Once Judge Approves
Once the workers’ compensation judge approves your settlement agreement, be it a structured or lump sum settlement, your benefits will be explained for the final time before you sign off. You cannot pursue more compensation once you sign off on your claim. In some cases, you may have the option to sue a third party for injuries after you accepted a claim. In most cases, you will likely have to repay your workers’ comp benefits once a settlement has been given. There are benefits to a third-party suit, which include:
- Compensation for pain and suffering
- Lost wages not covered under workers’ compensation
- Punitive damages
Third-party lawsuits can be tricky, so it’s best to consult an experienced attorney before taking legal recourse.
How Can Munley Law Help Me With My Workers’ Compensation Settlement?
Determining which workers’ compensation settlement agreement is right for you can be challenging. At Munley Law, we thoroughly review your workers’ compensation claim, handle negotiations with the insurance company, calculate your expenses, including medical bills, lost wages, future wage loss in case of disability, and, if further legal action is needed to remedy your suffering.
Much of your settlement depends on your current weekly wages, estimated need for medical benefits, and ability to return to work. Your employer’s insurance policy may make your workers’ comp case challenging, but with Munley Law, nothing is impossible. Our workers’ compensation lawyer will help you by:
- Explaining your rights under the Pennsylvania Workers’ Compensation Act
- Handling negotiations with the insurance company
- Representing you in front of a workers’ compensation judge in the event of a denial
- Calculate the full value of your workers’ comp benefits
- Guide you through the workers’ compensation process until you’ve reached a fair settlement offer
Remember, you can apply for future workers’ compensation benefits when you return to work, should your injuries worsen or if you get hurt again. Pennsylvania follows a no-fault system for workers’ compensation. This means you can still collect compensation even if you were partially responsible for your injury. To learn how Munley Law can help you pick the right workers’ compensation settlement, call us today for a no-obligation, free consultation.
