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How is a workers’ compensation settlement calculated?

There are two major value elements to settling a workers’ compensation claim. The first is the value of the indemnity benefits. Usually those are only the future benefits, but in some cases if lost time was contested from the beginning of the case these would include back owed and future benefits. These could be for the life of the injured worker or if the state has durational limits, they would be for a fixed period. Usually the future indemnity benefits are reduced to present value on the idea money owed in the future but paid today should be discounted. This calculation could be unnecessary if your state has periodic cost of living adjustments applied to these benefits.

Next you calculate the value of future medical expenses. This is frequently accomplished with the assistance of a medical professional who specializes in doing this work. In some cases, counsel representing a settling party will do the calculation if experienced in doing so. It is not uncommon for an employer or an employer’s insurance carrier to initiate settlement discussions. If they do, they will either solicit a demand or send a settlement offer. A settlement offer is usually a beginning point in the settlement process. It will provide a sense of what they are thinking the claim value might be. Arriving at a settlement value is not an exact science. There are intangibles that add to the value of a claim or detract from its value. If thinking about settling a claim, an injured worker would be well served retaining the services of someone who has had a wealth of experience negotiating workers’ compensation settlements.

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