Is a Workers’ Comp Lump Sum Settlement Right for Me?

How Do Worker’s Compensation Settlements Work in Bloomington, IL?

Illinois workers' compensation insurance, also referred to as workers' comp insurance or workman's comp, provides benefits to employees who sustain injuries or become ill while on the job. This coverage can assist with covering medical expenses and compensate for most of the wages lost due to the incident. Illinois workers' compensation does not offer benefits for illnesses or injuries caused directly or indirectly by unknown factors.

In Illinois law, businesses are required to provide workers’ comp insurance for each person they employ.

Injuries Covered by Workers' Compensation

Workers’ comp covers injuries sustained while working, such as:

• Repetitive stress injuries. These are temporary or permanent injuries to muscles, tendons, or nerves. They are caused by consistently repeating the same motions long-term. They include carpal tunnel syndrome, tendonitis, back strains, or shin splints.
• Slips, trips, and falls. These injuries occur when an employee trips over a hazard left in a walkway, falls from a height, or slips on unsafe or poorly maintained flooring.
• Stroke caused by work. A stroke can be work-related when excessive stress, or overexertion, is the root cause. People who reported the greatest levels of stress were 33% more likely to suffer a stroke than people who were less stressed. If medical evidence can show that the stroke was caused by a work environment or activity, it may be compensable.
• Heart attack caused by work. Similar to a stroke, employees can claim compensation if they suffer a heart attack that is caused by a work activity or environment. To do so, employees must prove that their work duties caused unusual strain exertion, or violence. They must also prove a link between these conditions and the heart attack.
• Existing injuries made worse by work. Engaging in full-time work heightens the likelihood of developing health issues such as hypertension, diabetes, metabolic disorders, and cardiovascular diseases, which can potentially lead to stroke and even fatalities. If a pre-existing condition, such as knee, back, or shoulder injuries, or arthritis, is aggravated by a workplace injury, the employee can file a workers’ comp claim. Aggravation can be proven using pre- and post-accident medical records, employment records, and witnesses.
• Accident-sustained injuries. Sometimes the nature of a job poses a risk of injuries. For example, in a factory or workshop, and employee might suffer injuries from work equipment.
• Mental health. Mental health injuries that are covered by workers’ comp include stress, depression, anxiety disorders, and post-traumatic stress disorder.

What Benefits Are Available Under Workers' Comp in Illinois?

Workers' compensation benefits are intended to cover the costs of sustaining a workplace injury. When an employee suffers a work-related injury, workers’ comp will help cover the following:

Medical Expenses

If an employee suffers from a work-related injury or illness, workers' compensation insurance can provide coverage to help him or her pay for medical expenses. These can include emergency room visits, surgeries, prescriptions, or any other medical costs incurred. For instance, if an electrician accidentally cuts his or her hand while working at a customer's home, workers' compensation insurance can help cover his or her hospital visit.

Ongoing Care

An injury may require ongoing medical treatment to heal. This could include doctor visits, rehabilitation costs, surgeries, medication, and other long term costs.

Illness-Related Treatment

It's possible for employees to be exposed to harmful chemicals or allergens in their work environment, which can result in illness. If an employee becomes sick due to a work-related incident or condition, workers' comp insurance can provide financial assistance to cover the costs of their necessary treatment and ongoing care.

Missed Wages

If an employee is injured to the extent that he or she needs to take time off work to recover, he or she may not be able to earn wages during this recovery period. If the employee misses out on wages during the recovery period from a workplace illness or injury, workers’ compensation will cover some of these lost wages.

Reduced Earnings Capacity

An employee might suffer an injury that affects his or her ability to continue doing his or her current job. Additionally, the injury may cause him or her to have lesser future career prospects. This will cause a reduction in that employee’s earnings capacity. In such a situation, workers’ comp will compensate the employee for a portion of the difference between the wages that he or she could earn prior to the accident and those he or she earns after the accident.

Death Benefits

Death benefits are designed to provide financial compensation to specific family members who have lost the financial support they were receiving from the deceased employee. The eligibility criteria for death benefits can vary from state to state, but they are usually available only to blood relatives, spouses, children, and other close relatives who were dependent on the deceased employee's financial support and lived with them.

Funeral Expenses

If an employee passes away due to a workplace accident, workers' compensation coverage can assist in covering the funeral and burial expenses of the deceased employee’s beneficiaries.

Workers' Comp Disability Benefits

Certain injuries may be severe enough to render an employee temporarily or permanently disabled. When an employee claims lost wages under workers' compensation, he or she is typically claiming them as some form of temporary or permanent disability benefits. There are four types of disability ratings in a workers’ comp claim.

Permanent partial disability (PPD) is a permanent injury that prevents an employee from performing some work-related tasks, while he or she is still able to perform other duties. The employee is able to work, although not at the same capacity or income level that he or she was able to before the injury. In such a situation, workers’ comp can pay a portion of the wage differential, which is the difference in wages between what the employee earned before and after the accident. Alternatively, the employee can receive compensation based on the loss of the use of a body part. The compensation depends on the body part affected.

Permanent Total Disability (PTD) provides lifelong financial assistance. This applies if an employee has suffered a permanent injury or illness that prevents him or her from working.

Temporary partial disability (TPD) benefits are available to employees who are injured and working in a limited capacity. These benefits are designed to assist workers during their recovery period. To qualify for TPD benefits, employees must earn less than they would if they were working at their full job capacity. Employees receive TPD benefits until they can return to their regular job or until they reach maximum medical improvement.

Temporary total disability (TTD). When an employee needs time off to recover from injuries, he or she may be unable to work entirely. Fortunately, workers' compensation allows a portion of the weekly wage to be claimed until the employee is fully healed and able to return to work.

The Workers’ Comp Claims Process

If you have been injured in a work-related accident, it may be helpful to know what to expect from the claims process.

Initial treatment

If you have experienced a work-related injury, you should seek immediate medical attention at a hospital or clinic. It's important to seek medical attention as soon as possible to prevent any medical conditions from getting worse. Your doctor will give you an initial diagnosis and may refer you to a specialist if needed.

Your employer is obligated to cover all medical expenses, and you should not incur any out-of-pocket costs. In the event that you notice an injury after leaving work, you should seek medical assistance as soon as you can.

Notify Your Employer

It is essential to inform your employer about any workplace injuries as soon as possible, but no later than 45 days after the accident. The earlier you notify your employer, the more difficult it will be for your employer to dispute your injury.

Determine Work Restrictions

You may be placed on work restrictions by your doctor while you recover. It's advisable to obtain documentation of any work restrictions during your initial treatment and inform your employer accordingly.

File the Claim

Typically, it is the employer’s duty to forward the claim form and all accompanying documents to the workers' compensation insurance provider. The medical report from the employee's physician should also be submitted. Claims are usually filed with the insurance company before submitting an Application for Adjustment of Claim to the Illinois Workers' Compensation Commission. It's best to consult with a Bloomington workers' compensation lawyer to properly file the Application and initiate the formal claims process.

Continue Medical Treatment

You should follow your doctor’s instructions as you continue your recovery. You should continue medical treatment until you reach maximum medical improvement, which is the point at which your injuries or illness have either fully healed, or have reached a stage where no further improvement is possible.

Submit to an Independent Medical Examination if Required

Your employer may request that you submit to an independent medical examination (IME). In an IME, you are sent to a doctor of your employer’s choosing, to receive a second opinion of your injuries and required medical care. If you have not done so at this point, it is advisable to contact an attorney. An IME can negatively impact your claim, and it helps to have an attorney to make sure that the IME is fair and correct.

The Claim Is Approved or Denied.

If your claim is denied, you can appeal the decision with the Illinois Workers’ Compensation Commission, or request the insurance carrier to reconsider its decision.

If your claim is approved, you can accept the initial offer, or negotiate for a higher settlement amount. Once you and the insurer have agreed on an amount, you can take structured payments or a lump sum.

Pros and Cons of a Lump Sum Settlement

A lump sum settlement is a way to close your workers’ comp claim. If you take a workers’ comp lump sum settlement, you will receive one large sum of money to cover all of your past expenses, expected future payments, and any other amounts claimed. If you do not take a lump sum settlement, your compensation will be made by way of structured payments over a period of time.

There are times when accepting a lump sum payment may be in your best interest. However, often your employer or the workers’ comp insurance carrier will offer a lump sum settlement, as it might save them money in the long run. Before deciding whether to accept a lump sum settlement, you should consider:

• How long will you be unable to work, and what wages are you likely to lose?
• Might your condition worsen, resulting in higher medical bills than anticipated?
• Will you need medical treatment for permanent disability resulting from a workplace accident?
• Is the single payment enough for all of your medical expenses and lost wages to be covered?

The pros to accepting a lump sum payment are that you receive payment immediately, rather than waiting for money to come in over weeks or months. This is advantageous if you have immediate financial needs, such as overdue bills. A lump sum payment also allows certainty on the amount of compensation, and you can use it as you see fit. If you receive structured payments, these will cease once you are medically cleared to work or pass away, leaving uncertainty over your exact compensation. A lump sum settlement allows closure of your claim, allowing you to avoid the frustration and time required to navigate the claims process.

If your doctor feels that you are likely to fully recover, and will not need future medical treatment, then it may be advisable to accept a lump sum offer.

On the other hand, there are cons to accepting a lump sum settlement offer. Once you accept a lump sum settlement, your case is closed. If further compensation is required for your injury in the future, you will be unable to pursue a claim for that compensation. Also, if you are still recovering from your injury, you may not know how much more medical treatment will be required, and what bills you are likely to incur. In this case, it can be difficult, if not impossible, to know if the lump sum is adequate to cover your needs. You will also need to be financially secure. It can be difficult not to spend the money received too quickly, allowing it to run out.

You may be early in your recovery, and there are uncertainties about how long your recovery will take, or what ongoing or future treatment you may need. In this case, it is probably advisable not to take a lump sum settlement, but rather to seek structured payments.

What Determines the Value of a Workers’ Compensation Settlement?

The amount that you are offered for your workers’ comp settlement will depend on certain factors:

• How severe the injury was, and medical treatment recommendations.
• Your pre-injury wages, and whether you can return to your previous position at work.
• Wages lost while recovering.
• What other disability or medical benefits you may be receiving.
• What costs you have incurred so far.
• Whether you have a permanent disability.

A lump sum settlement offer is made as a way for the insurer to decrease the payment they owe you. Therefore, you should know your projected, as well as current, costs so that you know what a fair compensation amount is before accepting a lump sum settlement offer.

What Is the Average Settlement for Workers' Comp?

The amount of a workers’ comp claim varies depending on factors such as the nature of your injury, how complex the treatment that you need is, and the length of your current employment. The more severe your injuries are, the higher your compensable medical expenses will be. If you lose substantial earnings, your workers' compensation settlement will be higher than someone who briefly misses work. If your workplace accident causes you to sustain a disability, your medical bills and lost wages will likely be higher.

Is a Workers’ Comp Settlement Considered Income?

When considering tax implications, settlements received through workers' compensation are tax-exempt, as long as they follow the guidelines outlined in the Workers' Compensation Act. You won't owe any taxes on your settlements at the local, state, or federal level.