When you are eligible for permanent workers’ compensation disability benefits, you are faced with a choice of how you receive your payments. You can take them all at once in a lump sum, or you could receive a structured settlement that pays you over time. The right choice between a lump sum vs. structured workers’ comp settlement depends on your own circumstances.
An attorney can review your situation with you and help you determine what type of settlement works best. Call the workers’ compensation lawyers at Horton & Mendez in Wilmington, NC, to discuss your case today.
Types of Workers’ Compensation Settlements in North Carolina
There are several ways that you can settle a North Carolina workers’ compensation claim:
- In a Form 26A agreement, you agree to receive weekly payments for your permanent partial disability, and you waive the right to future payments.
- A Form 21 agreement is very similar to a 26A settlement, except it involves temporary disability benefits.
- In a “clincher” agreement, you are settling your workers’ compensation claim once and for all. You are signing away any future right to money in exchange for one payment now.
The last two settlement options allow your case to remain open, and you can always petition for additional benefits if your condition changes. A “clincher” agreement is final, and you cannot come back for more money in the future, no matter what. You would have to sign a release agreement as part of the settlement as a condition.
Settlements May Work for Longer-Term Workers’ Compensation Claims
You may be entitled to workers’ compensation benefits over an extended period of time. You may have suffered a serious injury that appears will be permanent.
If you receive a permanent partial disability rating, you would receive benefits for a set period of weeks — North Carolina law allows for up to 500 weeks of benefits, depending on which body part was hurt. If you are permanently and totally disabled, North Carolina law allows you to receive benefits for your lifetime.
In both events, you are faced with a choice of how you receive your money.
The insurance company often wants to make you a settlement offer so they can clear the case off their books. They figure that they can save some money by offering you everything upfront. In some cases, they may want to reduce their own litigation risk in a disputed case and pay you somewhat less than you would get if you were to win your case.
There is less of an imperative for an insurance company to settle a shorter-term workers’ compensation claim. They may only be paying you benefits for weeks or months. Similarly, there is little motivation for you to want to take your money upfront when you know that you will be fully able to return to work at some point in the near future.
Why Does the Insurance Company Want to Settle Your Case?
The workers’ comp insurance company wants to reach a quick settlement agreement with you. Oftentimes, they will make you an offer before you even reach the point of maximum medical improvement. At that point, they will have a better idea than you of your future medical costs.
The insurance company may try to act opportunistically. Some injured workers prefer to wait until after they reach MMI to reach a settlement, but it may be tempting when the insurance company is offering you what may seem like a lot of money. Usually, you are better off waiting to settle until you know the full extent of your injuries and your hopes for any future recovery.
How the Insurance Company Settles Your Case
When the insurance company pays you, it will be in a lump sum. It would be up to you to structure the settlement working with another company. Once the insurance company pays the settlement, they have extinguished their future obligations to you completely. You would choose which company structures the settlement and negotiate the details with them.
When to Consider a Structured Workers’ Comp Settlement
If you have suffered a serious long-term injury, you may want to guarantee your future income stream through a structured settlement. Paying you the money in increments could keep you from overspending, and it would ensure that you have money coming in when you need it in the future.
You could even structure the settlement so the payments increase over time to account for inflation. You do not have to worry about overspending your medical expenses because this money is kept in a separate account and is overseen by an administrator.
When to Consider a Lump Sum Workers’ Comp Settlement
There are times when it makes sense to take all your workers’ comp benefits in a lump sum.
First, taking a lump sum settlement takes away any uncertainty associated with your claim, whether it is future financial concerns or any litigation issues.
Second, lump sum settlements give you control over all of your money at once, so you can make decisions about how to spend or invest the money. It is vital that you have a plan for the money before you receive it because there will be no further payments to you once you sign the settlement agreement.
You cannot go back and undo a lump sum settlement agreement once it is signed.
Always Get Legal Help Before You Sign a Workers’ Comp Settlement Agreement
Before you sign any agreement, you need the advice of an experienced workers’ compensation attorney. The insurance company may throw out settlement figures that pay you less, and it would be a mistake for you to accept. You do not want to settle your claim for less than it is worth.
You also need to know the best way to take your money that meets your own needs. The North Carolina Industrial Commission will approve your settlement if it seems fair and just, but you should not rely on them to strike down any settlement that underpays you at all. Only an attorney can fully protect your own legal interests and help you get all the money that you need to pay your bills and medical care.
Contact a Wilmington, NC Workers’ Compensation Attorney Today
The attorneys at Horton & Mendez have successfully represented numerous injured employees in complex workers’ compensation cases, and we can do the same for you. If you are considering a workers’ compensation settlement, you should have the knowledgeable counsel of a lawyer. You can get legal help understanding the difference between a lump sum or a structured settlement by calling us today for a free consultation.