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Work Comp Lump Sum Payments: Pros and Cons

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When you are injured on the job, you may experience extensive injuries that can impact you for the rest of your life. Unfortunately, workplace accidents occur daily across the Sunshine State.

If you find yourself in this situation, a benefit of Florida’s workers’ compensation system is that you can receive benefits even if the accident was your fault. However, the process is often complex, long, and even unfair.

One of the best ways to speed up this process and get a fair benefit is to let our Florida workers’ compensation attorneys at Sternberg | Forsythe, P.A. help with your claim.

At some point during the workers’ compensation process, you may have to decide if you will accept a settlement. This is a big decision and one you need to consider carefully. There are both pros and cons related to accepting a settlement. Learn more about these here, which will help you make an informed decision.

Related Aritcle: What Injuries Are Covered by Workers’ Compensation in Florida?

Lump Sum Payment vs. Structured Payments

Accepting a lump sum payment offers several advantages (more about these below). It is a payment that you receive right away. You get the money immediately, and it is based on your injury and its potential impact on your life in the future.

In this case, a judge will have to approve the lump sum settlement. The judge hearing your case will evaluate it to ensure you understand the settlement being offered. Remember, the judge is not tasked with ensuring the amount offered is adequate for what your needs are or will be. This is when you would rely on your Florida workers’ compensation attorney.

A structured settlement is another option. This is an arrangement made between the insurance company and you (the injured worker). The total amount is what will be paid in a lump sum and, instead, paid out to you as an annuity. This guarantees that you will receive regular payments over a set amount of time.

You can select the amount of time an annuity will be paid. For example, if you are given a lump sum payment of $100,000, you can choose that the annuity is paid for 20 years. This means you would receive $5,000 for 20 years.

It is also possible to defer your payment. You may want to do this if your injury or illness is stable, but it may deteriorate over time. In this case, you can wait to receive your payments until 10 years from the date of your trial. You still get the full payout, but you are just waiting to start receiving payments.

Annuity payments can also earn interest as time passes. This means you may receive more money from a structured settlement than you would with a lump sum payment.

Structured payments are tax-free; however, like lump sum payments, you can’t change the terms of the settlement once you have agreed to it. This means that even if your medical condition or financial situation change, you cannot receive additional payments sooner. You must stick with the original agreement that is made.

Related Article: Florida Workers’ Compensation Lawyer to Talks Back Injuries on the Job

Pros of Accepting a Workers’ Compensation Settlement

Some of the benefits related to accepting a workers’ compensation settlement include the following:

It Ends Your Case

Disputes related to workers’ compensation can take months (or longer) to end. When you finally receive a settlement offer, you may be ready to be done with the entire process.

This is particularly the case if you reached the point of MMI (maximum medical improvement) or went back to work recently.

It Shortens the Legal Process

Most court systems have a backlog of cases to get through. Because of this, it often takes a long time to resolve workers’ compensation cases.

As mentioned above, you may be waiting months – or longer – for a court date. However, if you agree to take a settlement, it means your case will be resolved faster.

Usually, a settlement will require the help of a mediator or arbitrator. However, this allows you to avoid having to go to court and being on the judge’s schedule.

Put More Money in Your Pocket Immediately

When you are offered a settlement for your worker’s compensation claim, you can accept a lump sum payment or payments over several years.

By taking the lump sum payment, you get more money in your pocket immediately.

No Spying from Insurance Companies

If you decide to take weekly payouts for several years, the insurance company will likely use methods and tactics to end your payments.

One of the most common uses is spying on you to see if you are engaging in activities that prove you are no longer disabled and, therefore, should no longer receive disability benefits.

Remember, insurance companies don’t just spy on you “in person.” They will also watch your social media accounts and your friends and family members’ accounts to see if they can find evidence that your benefits should be ended.

By taking the lump sum, your case is complete. There is no reason for the insurance company to use these tactics since you will have all the money you can ever get from them.

Related Article: The Dangers Of Filing A Permanent Partial Disability Workers’ Comp Claim Without A Lawyer

It Eliminates the Risk

When you reach a settlement agreement for your workers’ compensation case, it means that both parties have compromised. It also means you have more control over the outcome of your case and limit the surprises.

In a traditional court trial, you may walk away with nothing. Accepting the settlement and a lump-sum payment helps you eliminate this risk.

You Can Hire an Attorney to Help with Negotiations

During your workers’ settlement process, hiring an attorney is a smart move. They can negotiate on your behalf. This will help you get on an equal level with the insurance company and its team of expensive attorneys. It will also help you avoid cases of deception or manipulation.

With an attorney defending your rights, the insurance company will be more likely to respect you and your rights. Be sure to keep this in mind moving forward.

Related Article: How Does a Workers’ Compensation Lawyer Help Me?

Cons of Accepting a Workers’ Compensation Settlement

Some of the disadvantages related to accepting a workers’ compensation settlement include the following:

You Give Up Your Rights

When you end your workers’ compensation case, it means you are giving up some of your rights.

For example, accepting a settlement offer usually requires you to sign documents that state you won’t pursue additional legal action.

Insurance companies usually require this type of clause to be included in the settlement documentation. It will bar you from being able to request workers’ compensation benefits for the injury in the future.

Ongoing Negotiations May be Needed

With a settlement negotiation, you may avoid a lengthy battle in court. However, the initial settlement offer will likely be low. Workers’ compensation insurance companies utilize the fact that you want to end the process and hope you will accept whatever is offered. It is not unusual to go through multiple negotiation rounds before agreeing to a settlement and payment offer.

You Have Extensive Future Medical Needs

Do you know what your future medical needs will be? Will you need additional surgeries or rehabilitative services? Has your doctor provided you with a long-term diagnosis?

All this needs to be considered when trying to decide if you want to accept a lump sum payment. In this case, you are done – you can never seek additional benefits. If your needs may change, it may not be the right option.

Related Article: 3 Common Questions about Workers’ Compensation in Florida

You May Run Out of Money

Choosing a lump sum payment offers pros and cons. For example, it provides you with the money needed to start over. However, you must plan carefully to cover any future medical costs. If you are worried about overspending and running out of money, be sure to ask your lawyer about the possibility of a structured settlement, which may be a better option.

You May Get a Lowball Offer

Workers’ compensation insurance companies know that most people want to eliminate going to trial. Because of this, they may offer a lower offer than what is fair, hoping you will accept it out of impatience, frustration, or fear.

Knowing when you should accept an offer and when you should walk away is challenging. Having a workers’ compensation attorney to provide advice and guidance about this will help you make a decision that works for you now and in the future.

Related Article: How Do I Know if I’m Eligible for Workers’ Compensation?

What Are Lifetime Medical Benefits?

In Florida, workers’ compensation will provide your lost wages and temporary disability benefits for 104 weeks. However, for permanent disabilities, the time span is much longer.

If your authorized treating physician concludes that you will require ongoing medical treatment for an on-the-job injury and that this care is necessary and reasonable, you may be eligible for lifetime medical benefits.

The biggest advantage of this is that you will have coverage for all the medical treatment you need because of your work injury. However, in this situation, the burden of proof is placed on you. You must prove that the medical treatment you continue to receive is for the injury you experienced at work. Usually, a medical provider will require some type of pre-approval for the treatment from the insurance company.

For some people, this can lead to delays in the medical treatment that is needed.

This means that every time you need treatment, you have to prove that the cost is related to the work injury and that it is a reasonable treatment.

If you opt for a lump sum settlement, your lost wages will be calculated into the total amount. When you receive lifetime medical benefits, your medical costs are the only things that are covered. You will not receive compensation for any time you must take off from work in the future because of your on-the-job injury.

An example would be if your at-work injury results in you needing surgery five years from the time of your injury. Your surgery costs would be covered, but you won’t receive money when you are out of work.

Related Article: Meeting Florida Workers’ Compensation Benefits Requirements 

Don’t Wait to Contact a Florida Workers’ Compensation Attorney

If you are injured on the job in Florida, our legal team at Sternberg | Forsythe, P.A. is here to help. We understand the law and will work to protect your rights.

The first step is to contact our office to schedule a free initial consultation. We will discuss your situation and create a plan to proceed with your case.

We are here to help with your case, so contact us today. You deserve to receive benefits, and we can help ensure you do.

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