Here’s an outline of the New Jersey workers’ compensation settlement procedure.
Before settling your New Jersey workers’ compensation claim, you should carefully consider your choices. While many employees prefer a lump sum payout over the burden of filing a workers’ compensation claim or appealing a decision, a settlement is not always in your best interests. It all depends on what you gain and what you have to give up.
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What Exactly Is a Workers’ Comp Settlement?
When you settle your workers’ compensation claim, you forego certain benefits in return for a predetermined quantity of money. Settlements might be paid in a flat amount or in monthly, yearly, or other increments. Section 20 settlements and Section 22 settlements are the two forms of New Jersey workers’ compensation settlements.
Settlements under Section 20
If the insurance company denies your workers’ compensation claim or contests a portion of it, you may reach a Section 20 settlement. This is a complete and final settlement for a lump payment. You will be waiving any workers’ compensation benefits related to your claim, including future medical treatment. Even if your illness worsens, you cannot reopen your claim and seek further payments. Section 20 settlements are not accessible if your claim has been approved by the insurance carrier.
Settlements under Section 22
A Section 22 settlement, unlike a Section 20 settlement, may resolve any workers’ compensation claim, including approved claims. You and the insurance company agree on a precise permanent disability rating in a Section 22 settlement. The insurance company then agrees to pay your permanent disability compensation in installments in accordance with New Jersey’s benefit schedule. (For additional information, read our page on the kinds and amounts of workers’ compensation payments in New Jersey.)
You do not give up your entitlement to future medical treatment when you agree to a Section 22 settlement. If your health deteriorates, you may reopen your workers’ compensation claim and request further disability payments. However, you must renew the claim within two years after the final payment due under the settlement.
When Will My New Jersey Workers’ Compensation Claim Be Resolved?
Unlike in other jurisdictions, you may settle a workers’ compensation claim in New Jersey at any time. Many employees, however, wait until they have reached their maximal medical improvement (MMI). When your doctor feels your condition is stable and will no longer improve with therapy, you are at MMI. It is quite dangerous to settle before reaching MMI. If you settle before your illness has stabilized, you may forfeit crucial advantages, such as the cost of a costly operation or permanent disability benefits.
How Much Will I Be Awarded in a Settlement?
The value of a New Jersey workers’ compensation claim is a lengthy and comprehensive procedure. The fairness of a settlement amount is determined by a number of factors, including the severity of your injury, your need for ongoing medical care, your pre-injury wages, your ability to return to work, and any contradictory evidence in your claim (for example, that your injury was not caused by your job). If you don’t already have one, you should speak with a New Jersey workers’ compensation lawyer before accepting a settlement offer. Many employees undervalue their claims and accept insufficient settlements without the assistance of a lawyer.
You will not be required to pay income taxes on your workers’ compensation payout. Other things that may be taken from your settlement payment include:
attorney’s fees and court expenses
back child support, outstanding medical costs, and a Medicare set-aside account (money to cover future medical expenses related to your work injury, which must be spent before Medicare will cover treatment).
Read our post on how much of your settlement you will get to retain to learn more about these deductions.
How Can I Complete My Settlement?
Your settlement is not complete until it has been reviewed by the New Jersey Division of Workers’ Compensation and determined to be in your best interests. You will fill out a number of documents that outline the terms and circumstances of the Section 20 and Section 22 settlements. You must also attend a settlement hearing if you engage into a Section 20 settlement. A workers’ compensation judge will evaluate your settlement, ask you questions, and ensure you understand that you are entering a complete and final settlement during this hearing.
In practice, the division accepts most workers’ compensation settlements—especially if you have a lawyer. If you are not represented by counsel, the court will analyze the settlement agreement more closely to ensure that it is in your best interests.