According to the U.S. Bureau of Labor Statistics, the total number of reported injury cases increased by 6.3 percent to 2.2 million cases in 2021, up from 2.1 million cases in 2020. Since workers’ comp legal battles are lengthy, most cases usually end up in a settlement. If you’re considering settling, you’re probably wondering how much workers’ compensation settlement amount you should get.
On average, injured employees can expect a worker’s comp settlement anywhere from $2,000 to as much as $40,000. The amount varies widely because there are a lot of factors that can affect your settlement amount. It’s important to note that these figures are averages, and individual settlement amounts can be lower or higher. How you choose to receive your settlement (lump sum or structured payment) will matter, too. But more on that later.
In reality, getting a fair workers’ comp settlement amount is not an easy task. Not to mention that the workers’ compensation settlement process itself can be very confusing.
In addition, your employer and insurance provider will try to pay you as little as they can get away with. As an employee, you most likely don’t have much experience with workers’ comp settlement unless you get injured regularly. In contrast, your insurance provider has had much knowledge on the matter. In short, you’re at a significant disadvantage.
Remember that payment of the settlement amount terminates your insurance provider’s responsibility to you. Once the settlement agreement is set, that’s it. No matter what happens to you, they can’t be held liable.
You should consult a workers’ compensation lawyer before agreeing to a settlement amount. They’ve had years of experience handling such cases, so they’ll know how much you should get. They can also negotiate with your employer and insurance provider so you get the amount you rightfully deserve.
HOW WORKERS’ COMP SETTLEMENTS WORK
Almost all states require businesses to provide workers comp insurance for their employees. This not only protects the worker but also safeguards the employer against unexpected expenses due to work-related accidents.
Since workers’ compensation is implemented statewide, the policies vary nationwide. But in general, states adopt a no-fault policy. No matter who’s at fault, the employee can still get workers’ comp benefits.
Getting your workers’ comp benefits starts with filing a claim. In most states, you need to file a claim within 30 days after you’ve known about your injury. Otherwise, you may lose some or all of your benefits.
Once you file a claim, the insurance company will evaluate all the evidence presented. In some cases, they may also conduct an in-depth investigation if you have doubts about your claim.
If they deny your claim, you can take it to court. The court will then decide how much you should receive or if you’ll receive anything.
But if your claim gets approved, the settlement amount will be computed. The rules vary per state, but generally, your workers’ compensation settlement will include medical fees and lost wages.
FACTORS AFFECTING WORKERS’ COMP SETTLEMENT AMOUNT
As mentioned, many factors can affect workers’ compensation settlements. This includes:
YOUR STATE
Since each state has different workers comp rules, how much you’ll receive depends on your state’s regulations.
Medical benefits are uncapped in most states. This means that in most states, employees can claim payments for their medical treatments in total.
Lost wages compensation amount also varies per state. Most states pay 66 ⅔ percent of your weekly earnings before the injury. But in Alaska, Iowa, Maine, and Michigan, you can get up to 80% of your pre-injury income. While in Massachusetts and New Hampshire, you are only entitled to 60%.
TYPE OF DISABILITY
For the sake of workers compensation, disabilities arising from work-related injuries are classified into four types:
- temporary partial disability
- permanent partial disability
- temporary total disability
- permanent total disability
Each type of disability entitles the injured worker to varying amounts of benefits. In general, permanent disability entitles the injured worker to a lifetime pension. Some states, like Florida, set a cap on how long you can only receive benefits for temporary disabilities.
Total disabilities also typically entitle the worker to a higher compensation amount than partial disabilities.
BACK PAY
In most states, employers and insurance companies must pay workers comp benefits immediately after your claim is approved. If they fail to do this, then you might be entitled to back pay.
In workers comp, back pay refers to the benefits you should have received from when you were injured to when you received your payout. This can include penalties and reimbursement for medical expenses that the employer didn’t pay.
Settlement agreements that drag on for months or years tend to have substantial back pay.
MEDICAL BENEFITS
As mentioned, most states don’t cap how many medical benefits you’re entitled to. You can claim reimbursement for emergency treatments, medical supplies, rehabilitative treatments, etc. So, the amount of medical benefits you can receive depends on the nature and extent of your disability. Injured workers who need complicated surgeries get higher medical benefits than those who only require a few stitches.
PAYMENT STRUCTURE
During the settlement process, you can choose whether to receive your benefits as a lump sum or structured settlement.
If you choose the former, you’ll get all your benefits right away, which may include anticipated medical expenses. But then, if that money runs out, you’ll have no income to support you. Especially if you still can’t return to work or do any work. Plus, you may have to waive your rights to any reimbursements for future medical care. However, in some states, you may still retain your rights to medical treatments even if you opt for a lump sum settlement.
Structured settlements, on the other hand, entitle you to periodic payments. Compared to a lump sum settlement, the payments will be a lot smaller. But you’ll have guaranteed income until you can go back to work.
Depending on how your settlement structure is worded, you may also receive a combination of lump sum and structured payments.
WORKERS’ COMP SETTLEMENT CALCULATOR
Calculating a workers’ compensation settlement can be complex and depends on several factors, including the extent of your injury, the cost of medical treatment, your previous wages, and the laws in your state. Below is a simplified example of how it might be calculated:
Step 1: Determine the Average Weekly Wage (AWW)
The AWW is typically calculated by adding the wages earned the year before the injury and dividing by 52 (the number of weeks in a year).
For instance, if you made $52,000 the year before your injury, your AWW would be $1,000 ($52,000 divided by 52).
Step 2: Calculate the Compensation Rate
This varies by state but is often around two-thirds of the AWW.
In our example, this would be approximately $667 ($1,000 times 0.67).
Step 3: Estimate the Duration of Benefits
This also varies by state and depends on the severity of the injury. For instance, a total permanent disability might result in lifetime benefits, while a partial disability might only receive benefits for a set number of weeks.
Suppose you have a partial disability expected to last 104 weeks (two years).
Step 4: Calculate the Total Expected Benefits
Multiply the compensation rate by the duration of benefits.
In our case, this would be $667 times 104, or $69,368.
Step 5: Factor in Medical Costs
If your employer or insurance company is responsible for your medical costs, these will also factor into the settlement.
For instance, if your medical bills total $30,000, this would be added to the expected benefits.
So, the final settlement might be $99,368 ($69,368 + $30,000).
This is a simplified example, and actual calculations can be much more complex. Factors like future medical costs, the possibility of retraining, or the impact of the injury on your future earning capacity can also influence the settlement. Always consult a legal professional or your state’s workers’ compensation board for accurate information.
Also, remember that workers’ compensation is typically a no-fault system, meaning you’re entitled to benefits regardless of who caused the workplace injury. However, accepting these benefits usually means waiving the right to sue your employer for negligence.
AVERAGE WORKERS’ COMP SETTLEMENT FOR PERMANENT DISABILITY
According to an annual report by the National Academy of Social Insurance, the average workers’ compensation payment per claim with more than seven days of lost time was $41,003 in 2017. However, this figure includes claims for both temporary and permanent disabilities, so it should be taken as a very rough guideline only.
Permanent disability settlements are often higher than those for temporary disabilities due to their lasting impact on the worker’s ability to earn a living. The settlement is typically calculated based on a percentage of the worker’s pre-injury wages multiplied by the number of weeks designated by state law for the specific type of injury.
For example, if a worker with an average weekly wage of $1,000 suffered an injury that resulted in a permanent partial disability rated at 50%, and the state law assigns 300 weeks of compensation for that type of injury, the settlement might be calculated as follows:
$1,000 (average weekly wage) x 0.50 (disability rating) x 300 weeks = $150,000
But please note that this is a simplified example and does not consider many other potential factors, such as future medical expenses, vocational rehabilitation costs, and others.
Each case is unique, and it’s always recommended to consult with a legal professional or your state’s workers’ compensation board for the most accurate and personalized information.
VICTOR MALCA – Florida Workers Compensation & Social Security Disability Attorney
Victor Malca P.A. has over 27 years of litigation experience in Workers Compensation and Social Security Disability lawsuits. His experience and continued success when fighting for his clients puts him among the most trusted workers’ compensation attorney’s in Florida. He specializes in representing injured workers on compensation benefit cases and disabled individuals claiming lost social security disability benefits.
Book a free consultation today. Our unwavering advocacy for employee rights and privileges are recognized by our past clients across South Florida.
About The Author
Judy Ponio is a writer and editor for the Victor Malca Law P.A. website and blog. She enjoys helping people in need with questions about social security disability and workers compensation law. She has a passion for helping those in need and the elderly with accurate legal information that can make a positive difference in their lives.