What Is a Structured Workers’ Compensation Settlement in Minnesota


What Is a Structured Workers’ Compensation Settlement in Minnesota?

In some workers’ compensation cases, injured employees have the opportunity to negotiate structured settlements. This special kind of settlement pays out money over time, rather than in a lump sum all at once.

How Does a Structured Settlement Work?

Often, the workers’ compensation insurance company settles a claim by agreeing to pay a lump sum of money to someone who is injured, in exchange for the injured worker releasing all future claims for benefits based on that injury. Sometimes, the insurer will agree to pay a structured settlement instead. The insurer will make payments over a long period of time to the worker, again in exchange for a release. Structured settlements may benefit younger workers who are seriously injured, because they keep the workers from spending all of their settlement windfall at once.

Are There Different Types of Structured Settlements?

There are a few different kinds of structured settlements that a worker could negotiate:

  • A large initial payment (often to pay off overdue bills) plus smaller payments over time (to make up for lost income)
  • Additional amounts for extraordinary expenses (such as unexpected medical bills)
  • Payments increase over time, with smaller payments at first and larger ones later
  • Payments decrease over time, with larger payments at first and smaller ones later
  • Delayed payments, with no money changing hands until the worker reaches retirement

The type of settlement available in an individual case depends on what the injured worker can negotiate and what the insurance company is willing to pay.

Assignments and Taxes

Further, insurance companies often assign structured settlement payments to third party companies, because the insurers do not want the long-term liabilities on their books for years. Assignments also may lower the risk of default if an insurance company goes out of business.

Finally, taxes with some kinds of structured settlement can be a concern. Although workers’ compensation settlements usually are not taxable, you should talk to a tax professional about any additional issues with a structured settlement before you accept one.

Need help getting workers’ compensation for your injury? Joe Osterbauer, Esq. and the Osterbauer Law Firm stand up for injured Minnesota workers’ rights. Joe’s 27 years of workers’ compensation experience and his team’s speedy service combine to get clients the results they need. To schedule a free consultation, visit Osterbauer Law Firm online or call Joe’s office at (612) 334-3434.