If you are injured at work or suffer from a work-related illness, you may be eligible for workers’ compensation benefits. While these benefits can be paid on an ongoing basis, there may be an option to receive a lump sum instead.
Lump sum settlement
A lump sum settlement is a financial agreement between you and your employer’s workers’ compensation insurance carrier. It usually pays for medical expenses and a portion of your lost wages while you are unable to work, both for current needs and for the future.
Before accepting a lump settlement, it’s important to understand whether you will have future medical needs because once you accept the settlement, you will generally not be entitled to future funds.
It’s also important to note that a lump sum payment may have tax implications. It’s important to consider whether you will be able to work in the future and overall, how the injury may affect your earning potential.
There are several benefits to a lump sum settlement to consider. If you accept a lump sum, it can provide you with closure and control over your finances, which can be helpful if you have immediate financial obligations, like debt.
It can also prevent any future disputes or misunderstandings about payments from the workers’ compensation insurer, offer flexibility to save or spend the money as necessary, and the lump sum may be a larger amount than you would otherwise receive through monthly payments.
The lump sum payment may have to be approved by the workers’ compensation board.