Workers' compensation awards are typically paid as structured settlements, which spread the payments out over a specified period of time. This provides resolution for the employer and insurance company while still taking care of the injured party's medical bills and living expenses. Insurance companies often choose to purchase an annuity on behalf of the injured party to provide the required stream of payments without the insurance company's involvement in the future.
Stipulated settlements must be accepted by both parties. File the settlement with your state's workers' compensation commission to make the payment terms official. A doctor must determine your disability level as a percentage. Multiply your projected future earnings by this percentage to determine the amount of the settlement.
Compromise and Release
Approval of a compromise settlement is considered a release of further liability. You may not file another claim for the same injury. This type of settlement is best for people who have their own medical insurance or are able to cover their medical costs out of pocket. A physician must estimate the type of medical care you will need for the remainder of your life and the cost of such care. If you choose a lump-sum payment instead of a structured settlement, the insurance company may reduce the amount of your settlement by up to 3 percent.
A combination settlement is a mixture of a compromise settlement and a stipulated settlement. It is often used when the parties have certain items on which they cannot reach an agreement. The parties can execute a stipulated settlement for the items on which they agree and use the compromise and release procedure for the remaining items. This leaves the disputed amount in the hands of a qualified physician instead of relying on the parties' acceptance.
Commutation settlements are typically paid in a lump-sum estimation of your future expected benefits. The state workers' compensation commission must approve commutations. The insurance company must show that a lump-sum payment is in your best interest due to a specific need that requires the settlement. Full commutation pays you the entire amount of your future benefits and terminates your rights to any additional payments, including reimbursement of medical costs. Partial commutation only covers part of your future benefits, so you can claim additional expenses as you incur them.
- Purestock/Purestock/Getty Images