What is a lump sum settlement?
A lump sum settlement, otherwise known as a Stipulation or Stip, is a one-time payment which serves as once-and-for-all compensation for your workers’ compensation claim. A lump sum settlement can include upfront payment for your workers’ compensation checks and healthcare expenses.
If you are receiving workers’ compensation and have been off work for over four months, you may be able to negotiate a lump sum payout instead of continuing to receive your normal workers’ compensation payments. However, you should consider carefully before deciding to request a lump sum settlement.
Below are listed some of the pros and cons of receiving a lump sum payout for your workers’ compensation benefits:
Pros of a lump sum settlement:
- Upfront cash – Your lump sum settlement will provide you with potentially significant cash which may allow you to catch up on overdue bills, help your family fix any financial situations which may have been caused by your injury, and overall begin to put your financial life back in order.
- Reduced stress – If you were to continue to receive your periodic workers’ compensation payments there is always the chance that your employer may one day petition to reduce, suspend, or eliminate your benefits. However, by receiving a lump sum settlement you will have effectively eliminated these possibilities, resulting in a potentially less stressful situation.
- Potentially higher payout – By receiving a lump sum settlement you may inadvertently collect a higher overall payout than you would have collected if you had continued with your normal payments. However, this is difficult to predict, due to the uncertainties surrounding how long you would have collected your payments if you had not taken the lump sum settlement.
Cons of a lump sum settlement:
- Possible future needs – When you take a lump sum settlement, generally you must agree that you will receive no future compensation for your claim, even if the need arises. This means that whether you need an additional surgical procedure, or if your injuries or illness were to suddenly intensify, you will likely not be able to receive any additional compensation.
- Potentially lower pay out – As was cited above under the pros of a lump sum settlement, there is no way to know in advance how long you will be able to collect workers’ compensation. Therefore, it is possible that by accepting a lump sum settlement you may actually receive less compensation than if you had continued to collect your normal payments. This is especially true if your condition worsens and you require additional medical treatment in the future.
As you can see, deciding whether or not to request a lump sum payout for your workers’ compensation claim can be a complicated, but yet very important, decision. In order to review all of your options, we advise you to speak with one of our attorneys before accepting or declining a settlement. For a free phone consultation, give us a call today toll free at (800) 330-4988 or (860) 522-7044, or contact us online.