Once a worker suffers an occupational injury while working for you, he or she becomes your responsibility for life. If the injury recurs or flares up, the employer remains responsible for providing the necessary medical treatment. This holds true even years after a relatively minor accident.
Some workers’ compensation claims remain open for years, or even decades. Using a structured settlement can help both your organization and the injured employee move forward.
Under a structured settlement, proceeds of the court settlement go to the plaintiff in the form of periodic payments, including scheduled lump sum payments. Payments can last for a year, for the claimant’s lifetime, or somewhere in between.
When an organization and employee agree to a structured settlement, they will generally use a structured settlement broker. An experienced broker can help you negotiate the terms of the agreement and arrange funding. Structured settlements generally are funded by a single-premium annuity contract held by the employer.
Structured settlements offer the following advantages:
- They release employers from future obligations. Both the employer and employee can move on.
- They provide a continuing stream of income to injury victims. This minimizes the risk that injured workers will spend away their claims proceeds and run out of money.
- They can provide injured workers a tax-free source of income.
- They typically prohibit the claimant from assigning or transferring his/her rights to receive future payments. This helps prevent fraud, embezzlement and running out of funds.
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