Workers' Compensation

Benefits of the Lump Sum Settlement

Chelsea Bikner
Benefits of the Lump Sum Settlement
Reading time 4 Mins
Published on Jul 8
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The Ohio Bureau of Workers’ Compensation (BWC) guarantees workers the right to pursue medical and lost wage benefits when they are injured on the job. While many workers’ comp claims are resolved quickly and at reasonable costs, others can be extremely expensive or drag on for an extended period of time. To resolve all past, present, or future medical and compensation issues and liabilities related to a claim, the BWC gives employers the option to offer injured workers an approved lump sum settlement (LSS). While an LSS isn’t right for all claims, there are some cases in which a fair and equitable settlement is in the best interest of the injured worker and their employer. Read on to learn more about the benefits of lump sum settlements.

The basics

The employer, their third-party administrator (TPA) partner, the BWC, and the injured employee must work together to reach an agreement to settle one or more claims with a lump sum settlement. For injuries that are lengthy or where the associated compensation payments could continue indefinitely, an LSS can be in the best interest of all parties involved.

Claims can only be settled when the employer, the worker, and the BWC agree that the claim is eligible for settlement and reach an agreement on the amount of the LSS. Depending on the type of injury and claim, the settlement may cover both the medical and lost wage portion of the claim or only one portion. Once a settlement is reached, the injured worker receives a lump sum payment from the BWC. After settlement, the treatment process and timeline are at the discretion of the employee – giving them greater control over their treatment. To learn more, read Cost Containment Strategy: Lump Sum Settlement.

Manage claim costs

One of the biggest benefits of settlement in the short-term is the ability to manage the costs of the claim. When a claim is settled, the claimant is awarded a dollar amount that is considered to be a fair full and final payment on the claim and no future costs can be added to the claim.

With an LSS, the employer is able to limit their exposure on a specific claim. Since the employer and their TPA work with the BWC to determine a fair amount to be paid to the injured worker for the claim, the employer is assured that the amount of the LSS (and any amount already paid out by the BWC) will be the limit of their exposure in the claim. Since some injuries, like back and shoulder injuries, can be on-going and extremely costly, an LSS can be an effective and advantageous cost containment strategy for employers.

Impact on premiums

A lump sum settlement can also better position employers to limit the impact of a claim on their premiums. Since a significant portion of an employer’s premium determination is based on their claim history, taking steps to limit the amount paid on a claim is vital to keeping premiums in check.

Using an LSS to limit the amount paid on a claim can help employers save significantly on their premiums in the long-term. Settling removes the reserves associated with the claim for all future rate-making – only the actual costs paid on the claim plus the settlement amount affect the employer’s premium rate. Learn more about keeping your premiums in check by reading Best Cost Containment Strategies for Ohio TPAs.

In your corner

While the Ohio Bureau of Workers’ Compensation doesn’t require employers to work with a TPA, a successful TPA partnership not only leads to less stress for you when a claim is filed, it can also provide significant annual premium cost-savings for your company. By allowing your business greater access to cost containment strategies, your partnership with a TPA can often pay for itself. While the Bureau of Workers’ Compensation looks out for the interests of your injured employees, your TPA will help you save money and provide assistance with claims.

Learn more about Workers’ Compensation today by contacting a Sheakley WC professional. Stay up-to-date on all things Sheakley by subscribing to our blog and following us on social media. Join in the discussion by commenting below.


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