A lump sum workers’ compensation settlement allows you to receive a one-time payment instead of ongoing weekly benefits through your self-insured employer or the Ohio Bureau of Workers’ Compensation (BWC). These settlements convert future benefits into immediate compensation and usually close your claim either in full or in part. All settlements must be approved by the BWC for state-fund claims, or by the self-insured employer (and in some cases, the Industrial Commission) for self-insured claims.
You might prefer a lump sum settlement if you’ve got mounting medical bills or need funds for career retraining. At the same time, accepting these settlements typically means you’re giving up valuable rights to future medical care and wage replacement benefits.
When the Bureau of Workers’ Compensation (BWC) reviews your case, their priority is protecting the workers’ compensation fund. As a result, their settlement offers are often lower than what you should receive. Employers, whether state-funded or self-insured, are also involved in the process and their main concern is saving money. Because of this, you should speak to an experienced workers’ compensation attorney before making a decision that could affect your financial security for years to come.
What are the Different Types of Lump Sum Settlements in Ohio?
Ohio’s BWC system offers three main types of lump sum settlements, each with different implications for your future wage benefits and medical treatment.
1.Full and Final Settlements
A full and final settlement closes your workers’ compensation claim completely and permanently. You receive one lump sum payment in exchange for giving up all future rights to medical treatment, wage loss benefits, and any other claim-related compensation. This type of settlement provides the highest payout because you’re relinquishing everything the claim might cover in the future.
The benefits of this arrangement include immediate financial relief and complete freedom from BWC oversight. You won’t need to attend medical appointments mandated by the BWC or your employer, report your work status, or deal with claim management bureaucracy. However, the risks are substantial because you’ll pay all future medical costs out of pocket, even if your work injury worsens or requires expensive surgery later.
2. Indemnity-Only Settlements
An indemnity-only settlement closes the wage replacement portion of your claim while keeping your medical benefits open. You receive a lump sum for your lost wages and other compensation benefits, but you retain the right to workers’ compensation-covered medical treatment for your work injury. You can continue seeing approved doctors and receiving prescribed treatments without worrying about medical costs.
However, these settlements are uncommon. Both you and the other party must agree, and employers or the BWC often don’t want to leave medical benefits open. Even when they do, the BWC typically discounts the value of the compensation portion because the medical remains open. That means the settlement is often for less than it should be. Injured workers should be cautious about these agreements and speak with an attorney before deciding if this option is right for them.
Lump Sum Settlements for Permanent Total Disability (PTD)
Permanent Total Disability benefits provide lifelong wage replacement when your work injury prevents you from returning to any gainful employment. Ohio pays PTD at 66.67% of your average weekly wage, subject to annual maximum limits. These benefits typically continue for life, regardless of retirement age.
While someone receiving PTD might consider settlement for reasons such as immediate access to a large sum of money, relocating to a state with lower living costs, or ensuring their family receives an inheritance, we have very serious concerns about PTD settlements—especially with state-funded claims. The Ohio Bureau of Workers’ Compensation (BWC) uses life expectancy statistics that differ from those adopted by the U.S. Government. These figures are applied in a way that reduces the future projected value of PTD benefits. On top of that, the BWC often demands an additional reduction in claim value, even after their calculations already undervalue the benefits.
In our experience, the vast majority of PTD settlement offers from the BWC are not made in good faith. They tend to take advantage of the most seriously injured workers who are often in desperate need of funds. This practice undermines the purpose of Ohio’s workers’ compensation system, which was intended to protect—not shortchange—injured employees. Because of these concerns, PTD settlements should be approached with great caution.
Medical considerations add another layer of risk. A PTD settlement requires showing that your condition has stabilized. Progressive conditions requiring ongoing treatment (for example, degenerative disc disease) make settlements especially risky. If your condition could worsen, a lump sum payout may leave you financially vulnerable when you need support most.
Are You Receiving Medicare?
If you’re on Medicare (or will become eligible within 30 months of your settlement), you’ll need to be concerned about Medicare Set-Asides (MSAs). An MSA reserves part of your settlement money specifically for future medical costs, ensuring Medicare won’t pay for treatment plans that should be covered. This amount is calculated based on your expected lifetime medical needs and must be spent down before Medicare will cover injury-related care.
Please note: You shouldn’t settle your medical benefits if your condition remains unstable. If doctors can’t predict your long-term medical needs with reasonable certainty, settling becomes too risky. Keeping your medical benefits open provides better long-term protection than any settlement amount. That’s why it’s so important to have an experienced workers’ compensation attorney who can evaluate your situation and protect your best interests.
How are Lump Sum Settlements Calculated in Ohio?
Ohio doesn’t use a formula to calculate workers’ compensation settlements. Instead, your employer or the BWC determines what medical and wage replacement benefits they believe you might need in the future and weighs them against the probability and timing of those needs.
Several factors can affect your settlement value:
- Age and Life Expectancy: Younger workers usually get higher settlements because they have more years of potential benefits ahead of them. The longer your expected lifespan, the more valuable your future benefits become in settlement calculations.
- Nature and Severity of Injury: Permanent injuries or those needing ongoing treatment command higher settlements than minor injuries that heal completely. Lasting disabilities or functional limitations are likely to justify larger settlement amounts.
- Future Medical Treatment Needs: The BWC or your employer will carefully evaluate the likelihood you’ll need surgery, ongoing medications, or long-term care. The more expensive your projected medical needs, the higher your settlement value becomes.
- Lost Earning Capacity: This factor comes into play if your injury prevents you from returning to your previous job or forces you to accept lower-paying work. Your age, education, and transferable skills all influence how much earning capacity you’ve lost due to your injury.
- Likelihood of Claim Reopening: If your condition might worsen or develop complications, the settlement value increases to account for these risks. Employers and the BWC tend to prefer to settle claims that might become more expensive over time rather than face unlimited future liability.
- Cooperation with Treatment: Your participation in treatment and vocational rehabilitation can influence the settlement offer you receive. Workers who follow medical recommendations and participate in return-to-work programs often receive more favorable settlement terms.
- Work History and Education Level: These factors affect your ability to find alternative employment and return to the workforce. A strong work history and higher education levels can increase your settlement value by demonstrating lost earning potential.
- Quality of Medical Evidence: Clear documentation of your injury and limitations supports your case for higher settlement values. Well-documented medical records from treating physicians carry more weight than incomplete or contradictory medical evidence.
Your employer and the BWC (or Industrial Commission for self-insured employers) must both agree to any settlement terms. The approval authority reviews the proposed settlement to ensure it’s fair and reasonable given your circumstances. They consider whether the settlement amount adequately compensates you for the rights you’re giving up. If either party believes the settlement is inadequate or excessive, they can object or request modifications. The negotiation continues until all parties reach an acceptable agreement or settlement talks break down.
Should You Accept a Lump Sum Settlement Offer?
Lump sum payments do have their advantages. You get the financial resources you need to pay off debts, invest the money, or make major purchases without restrictions. However, settlements come with serious disadvantages you must consider before accepting any offer.
- You give up all future workers’ compensation benefits related to your injury, which means you’ll pay the cost of medical treatment out of pocket even if your condition worsens. The risk of underestimating future care needs is real: Money that seems adequate today might prove insufficient if you need expensive surgery or develop complications later.
- You also lose the security of guaranteed lifetime benefits that workers’ compensation provides.
Watch for red flags that indicate you shouldn’t accept a settlement offer. For example:
- Lowball offers suggest the carrier is trying to close your claim cheaply.
- Pressure to settle quickly, before you understand your medical prognosis, often means the offer doesn’t account for all your potential needs.
- Failure to consider future complications also signals an inadequate settlement offer.
You should review any settlement offer with a workers’ compensation lawyer before making a decision. An attorney can evaluate whether the offer compensates you for the rights you’re giving up and help negotiate better terms if needed. They can explain the long-term implications of settling and help you understand what you might be giving up in future benefits. Taking time to get legal representation protects you from making a decision you might regret.
How Plevin & Gallucci Helps with Lump Sum Settlements
Plevin & Gallucci has over 50 years of experience handling Ohio workers’ compensation claims. Our attorneys understand how settlement values are calculated and know when offers are fair versus when they’re trying to shortchange injured workers. We’ve developed proven strategies for maximizing settlement values while protecting your future rights.
We help injured workers from every industry obtain fair compensation for their injuries. When you work with us, you benefit from:
- Thorough Case Review: Our workers’ comp attorneys review your medical records, evaluate your future treatment needs, and calculate what your claim is worth before settlement discussions begin. We analyze every aspect of your case to identify all potential sources of compensation.
- Settlement Negotiation: We negotiate directly with the BWC, self-insured employers, or their representatives to secure the best settlement for your situation. When they present lowball offers, we push back with medical evidence and legal arguments that support higher settlement values.
- TTD Settlement Strategy: We evaluate your return-to-work prospects and future earning capacity to ensure the settlement reflects your true wage loss. Our attorneys consider your age, education, and transferable skills when calculating the value of your temporary disability benefits.
- PTD Settlement Handling: For PTD settlements, we work with actuaries and medical experts to project your lifetime needs and negotiate settlements that provide long-term financial security. We also make sure they account for inflation and changing medical needs over time.
- Medical Settlement Protection: We analyze your future treatment needs and ensure Medicare Set-Aside requirements are handled properly. We also help you avoid mistakes that could jeopardize your settlement money or future Medicare coverage.
- Proven Results: Our track record includes securing settlements that exceed initial offers by hundreds of thousands of dollars for injured workers throughout Ohio. We’ve helped construction workers, factory employees, healthcare workers, and professionals obtain fair settlements for their injuries.
What Happens After You Accept a Lump Sum Settlement?
Once you accept a settlement offer, the approval timeline depends on whether your employer is state-funded or self-insured. For state fund employers, the BWC reviews your settlement documents and usually issues an approval order within 30-60 days. For self-insured employers, the Industrial Commission generally follows a similar timeframe. Both approval authorities review the settlement to ensure it’s fair and meets legal requirements before giving final approval.
After approval, a mandatory 30-day waiting period begins before your settlement becomes final and payment is issued. During this waiting period, either party can withdraw from the settlement agreement by filing written notice with the appropriate authority. This cooling-off period protects both you and your employer from hasty decisions that might not be in your best interests. If no one withdraws during the 30-day period, the settlement becomes binding and can’t be reopened except in very rare circumstances.
Know What You’re Signing Before You Settle
Workers’ compensation settlements are permanent decisions that can’t be undone once the waiting period expires and you receive your payment. You give up rights to future medical care and wage replacement benefits that could be worth more than the settlement amount over time. An attorney can evaluate whether the offer compensates you for your injuries and help negotiate better terms if the initial offer falls short.
Plevin & Gallucci has handled thousands of workers’ compensation settlements throughout Ohio, including cases that involved multiple surgeries, permanent disabilities, and lifetime medical needs. Our attorneys can discuss your settlement options, provide appropriate legal advice, and make sure you understand the implications of any offer you’re considering. To schedule a free consultation, call us today at 1 (855) 4-PLEVIN or send us a message online.
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