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Is a lump sum or structured settlement better for injured workers?

On Behalf of | Apr 18, 2024 | Uncategorized

When someone gets hurt on the job or a doctor diagnoses them with a health issue caused by their employment, they may need financial help. Workers’ compensation benefits serve as a safety net to protect employed individuals from financial devastation when their jobs cause medical challenges. Particularly in scenarios where a worker suffers a significant injury in a workplace incident, they may have massive support needs.

Someone may require medical care including surgery and physical therapy because of the job-related health issue. They may also have a long-term reduction in their earning potential. Some people must take weeks away from their jobs. Others may never be able to work again. In cases with permanent symptoms that are not totally debilitating, workers may need to move to a lower-paying job after an injury.

The Iowa workers’ compensation program may pay some claims as they arise. Workers might also receive settlement offers. Is it better to pursue a lump sum settlement or a structured settlement for work injury expenses?

Each option features benefits

A settlement for a large workers’ compensation claim represents a fixed amount of compensation. A settlement offer should reflect both medical care costs and wage replacement needs.

In some cases, a lump-sum settlement is the best option. It involves someone receiving a large amount of funds all at once. They can be useful when the negotiation process has been lengthy and a worker has numerous past-due bills to cover as soon as possible. However, lump-sum settlements can cause tax challenges. They can also sometimes lead to workers not receiving enough support. The initial settlement offer can seem generous until someone begins paying what they owe. At that point, they may realize that the settlement isn’t enough given the extent of their losses.

A structured settlement involves the worker receiving regular payments in a set amount, usually for a specific amount of time. Structured settlements can be a great option for those who don’t have massive outstanding expenses but who require support to cover their bills.

The downsides of a structured settlement often include difficulty budgeting and the possibility of someone not having access to financial support when they do have sudden costs. It can be hard for someone coping with a reduction in income to effectively evaluate a settlement offer. It is even more difficult for someone to negotiate a settlement on their own behalf.

Learning about the different options available by seeking legal guidance may benefit those who could potentially qualify for a settlement during an Iowa workers’ compensation claim.