Workers’ Compensation Lump Sum Payments: The Pros & Cons

Lump sum payments, also known as Compromise & Release, are one-time payments made to injured workers after a work-related injury instead of weekly or bi-weekly payments, or ‘structured settlements’, made over a period of time.

Lump sum settlements are great for injured workers in some cases, but not all. Especially for injured workers that might have future medical expenses due to their workplace injury, a lump sum payment is likely not the best choice.

The Pros Of Lump Sum Payments

Some signs you may benefit from a lump sum payment include the following:

  • You aren’t recovering further from your injury, or you have reached the extent of recovery – this means that you will likely not incur future medical expenses, and the lump sum offered will cover your past and current expenses.
  • The amount of money offered in the settlement will provide financial security as you work to get better – if you, your doctor, and your lawyer all agree that the amount offered is enough to support you as you recover from your injury, it may be a good idea to accept it.

Long story short– if your doctor does not think you’ll need future medical treatment due to your work-related injury, then accepting a lump sum settlement offer makes sense.

​The Cons Of Lump Sum Payments

​Some signs that accepting a lump sum offer is not the right move:

  • You have not yet recovered much from your work-related injury – if you’re in the early stages of recovering from your injury, the amount of money it will take to fully recover can be hard to determine, and the lump sum settlement may end up being for less than what you really need. If your condition worsens and requires future medical care, you’ll be responsible for the costs. In that case, weekly benefits may be the way to go
  • Your doctor thinks there is a possibility your work-related injury will necessitate future medical treatment – if there’s a good chance that your work-related injury will require medical treatment down the road, a lump sum settlement is likely not the right decision. Accepting a lump sum settlement waives your rights to re-open the case in the future, so if you end up needing more money to cover future medical treatments, you will be responsible for those medical bills yourself.
  • You might qualify for social security disability – if your injury is long-term or permanent, you may qualify for social security disability. Accepting a lump sum payment could reduce the amount you receive from your disability payments. You need to factor this in before you decide on whether to accept it, especially if you will be receiving workers’ compensation benefits and SSD benefits at the same time.
  • You expect future benefits like pension contributions – a lump sum settlement may impact the value of expected pension amounts after you retire.

These are serious considerations for your future financial stability and shouldn’t be taken lightly when deciding on how to receive your money from workers’ compensation.

While a lump sum settlement is allowed in Pennsylvania, it might not be in your best interest. It may actually be better to wait longer in your recovery timeline before you decide to accept a settlement.

What Determines The Value Of A Workers’ Compensation Settlement?

The lump sump is paid for by the employer’s workers’ compensation insurance. The proposed settlement amount is usually dependent on several factors:

  • The severity of injury and impairment
  • Wage loss
  • Whether or not the injured employee can return to their previous position at work
  • The other benefits the employee is receiving (disability benefits, other medical benefits)
  • The cost of medical treatment

It’s important to understand that the insurer is making the lump sum offer to reduce the amount they will need to pay you. Therefore, you will need to make sure the offer is fair when considering your current and projected medical costs.

What To Do If You’re Offered A Lump Sum Settlement

You should know that you’re not required to accept a lump sum payment, and you can negotiate with the insurance company to adjust the amount. However, if you decide to negotiate, you should contact an experienced workers’ compensation lawyer to handle that process.

Before accepting a lump sum settlement, it may be beneficial to talk to your doctor if you haven’t received a long-term prognosis for your injury. Find out if you will be able to go back to work and if there will be any permanent effects or a disability that results from the injury. Consider the fact that the injury could also worsen over time and necessitate future medical treatment.

With an attorney on your side, you can more effectively navigate the workers’ compensation system, and you have more power in negotiations to reach a settlement agreement that will benefit you.

Contact Us To Discuss Lump Sum Payments for Workers’ Compensation

If you determine that a lump sum settlement is what you want or you would simply like some more guidance, contact the law firm of Krasno, Krasno & Onwudinjo to discuss your workers’ comp case. You won’t have to worry about fees initially, because we don’t get paid unless you get paid.

The workers’ compensation attorneys at Krasno, Krasno & Onwudinjo has been representing injured workers in workers’ compensation cases since 1936. Our experience will help you get the workers’ comp benefits you deserve.

Contact us today for a free consultation at 877-794-2396.


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