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Understanding a compromise and release settlement in California

| Jul 19, 2021 | Workers' Compensation |

One way to handle your workers’ compensation payments and benefits in California is to agree to a settlement. A compromise and release settlement is not necessarily a good thing for a worker, and the state does warn workers that settling a workers’ compensation claim may affect other benefits that you could be entitled to in the future, such as Medicare, Social Security and long-term disability benefits.

However, it does not put your vocational rehabilitation benefits or supplemental job displacement benefits at risk. Therefore, there are times when a settlement may be welcome if a worker foresees themselves going back to work in the future.

What happens if you sign a compromise and release settlement?

When you sign that settlement, you’re agreeing that you will release your employer and insurance carrier from further claims for the injuries you suffered that are covered by the agreement. This also releases those parties from claims of death benefits, which is something to consider.

In exchange, the compromise and release settlement allows the parties to come to an agreement on a settlement amount that will be paid as a lump sum within 30 days of the approval of the agreement.

Is a lump sum settlement right for everyone?

No, lump sum settlements aren’t the right choice for everyone. However, they could be a good option in your case if you plan to return to work at a specific time or know that you won’t need to collect Medicaid, death benefits or other provisions from the workers’ compensation coverage. It’s important to consider all of your options before you decide what to do.