The workers’ compensation system has, for the most part, functioned successfully for more than 100 years. There are certainly controversies but the vast majority of injured workers get the medical treatment and the dollars they need to heal and return to productivity.
But there is another segment of injured workers with quite different stories to tell. These are the injured workers who have received benefits for some time and then settled their claims. What happens to these injured workers once they are out of the workers’ compensation system and on their own? Do they live out their lives stress-free with plenty of money for their medical and living needs, and if not, are there things the industry can do differently?
Sadly, most injured workers who have settled their claims find their money runs out long before they planned, and spend years struggling to make ends meet. But that situation can and is changing. Understanding the perils facing injured workers who settle their claims, as well as the options that are available to them can make a tremendous impact on their lives.
Settling a Claim
For the most part, both payers and injured workers would ideally like to have claims settled; for payers it means getting legacy claims off the books, while injured workers are free of a complex, frustrating system that may restrict their care, and if they settle, they have money for future living and medical needs.
But the reality of post-settlement life is filled with financial and administrative minefields that could overwhelm even the savviest injured worker. Managing the money to ensure it lasts, finding appropriate medical providers, keeping payments for medical treatments and pharmaceuticals to fair and reasonable rates, and adhering to the many applicable rules, regulations and laws can be daunting.
Settlements are generally paid out in one of two ways, or a hybrid of the two:
- Lump sum payment, where the parties agree on a specific amount that is paid to the injured worker in full.
- Structured settlement, in which periodic payments are made over the person’s lifetime.
Given the choice, most people surveyed — including injured workers — say they would opt for a lump sum payment. They believe they are best able to manage their own money and feel this gives them guaranteed financial independence.
Research has proven that this assumption is wrong. Whether a payout from an injury case or a government-run lottery, a substantial percentage of people who elect single payments find their funds dwindle rapidly. Every year more and more lump sum recipients are disappointed in the amount they have left.
Running out of money is among the biggest concerns, but it is hardly the only obstacle facing post-settlement workers. Here are additional issues:
Paying for medical care.
Once out of the workers’ compensation system, injured workers must pay for their medical providers, medications, surgeries and other procedures, as well as other medical necessities that may arise, such as durable medical equipment and home modifications. While many believe these injured workers can negotiate reasonable prices according to their state’s fee schedule, that is often not the case. Instead, they often overpay due to a lack of understanding about fee schedules, Current Procedural Terminology (CPT) codes, rates, modifiers, rules and other aspects of fee schedules that can be extremely complicated. The fact is, an average person that is not trained in the subject would be hard pressed to know where to even find their state’s fee schedule let alone interpret it.
Finding appropriate medical care.
Depending on the state, the workers’ compensation system may allow the payer to direct injured workers to specific providers or let the injured worker decide. However, even in so-called self-directed states, injured workers are typically given some guidance as to the best providers to see. Post-settlement, the worker is on his own to decide whom to see. While that might be appealing at first, the person may end up with a physician who is not privy to his medical history, or the provider may be uninformed about billing issues specific to the injured worker.