How To Settle Tough Workers’ Comp Cases Without Unintended Consequences

How to Settle Tough Workers' Comp Cases Without Unintended ConsequencesA structured settlement can be a great way to ensure an injured worker is able to care for himself and his family for life. But it’s important to make sure all the right parties involved and are working as a team. Otherwise, there could be adversarial relationships and unintended consequences down the road.

 

While most people believe they would be best able to control their money by taking a lump sum, there are vast amounts of research to the contrary. Many people who do so end up with little to no money within just a few years. A structured settlement provides the injured worker with a steady, predictable tax-free income to handle all of life’s obstacles – when it is set up correctly.

 

 

Types of Issues

 

The injured worker’s future medical and living expenses are obvious needs. But, setting up a lifetime income stream entails identifying and thinking through all of a person’s financial needs over his lifetime. Examples of just a few of the issues that might need to be addressed include:

 

  • Medicare compliance.
  • Lien satisfaction.
  • Public benefits.
  • College education.
  • Home ownership.
  • Business setup.

 

A properly developed structured settlement must take into account the needs of the particular individual, since each person is different. Focusing on those, rather than just a dollar amount, yields the best outcome for all.

 

As an example, an injured worker who is a quadriplegic might need money for medical treatment and pharmaceuticals, home modifications, a vehicle retrofitted to handle his needs, money for his child’s eventual college education, and funds to establish his own business so he can be a productive member of society.

 

An injured worker incapable of caring for her own children might need money for caregivers for them, as well as someone to help care for herself. Additional funds might be needed for the children’s college educations.

 

It’s imperative to determine what is most important to the injured worker.

 

 

People Involved

 

The settlement could include a combination of strategies. For example, there may be liquid cash to handle immediate financial obligations such as medical expenses or liens resulting from the injury, a trust to protect certain benefits, and a tax-free annuity to cover future financial needs.

 

A properly setup structured settlement can solve complex problems if the key people are involved in the process. The first step is to identify the injured worker’s needs and goals; then consult with all relevant parties.

 

Some of the key players in a structured settlement could be:

 

  • Structured settlement broker. You want a reputable person and organization with experience and a solid track record of producing successful structured settlements.
  • Injured worker. The injured worker should not be an afterthought in the process, but should be actively engaged to avoid disputes later on.
  • Family members. Depending on the injured worker’s situation, it might be beneficial to include a spouse, sibling(s), parent(s) children, and/or relatives.
  • Medical personnel. The treating physician and possibly additional medical experts should be consulted to ensure all the injured worker’s medical issues are addressed.
  • DME specialist. Wheelchairs, ramps, and special equipment for the home and/or vehicle should be considered both for the immediate future and the long term.
  • Lawyers involved in the claim should all be included in the structured settlement discussions to iron out any challenges that might arise. Additionally, there may be a need for additional attorneys, perhaps to set up a special-needs trust.
  • Benefits experts. If the injured worker is receiving Medicare, Medicaid or some other public benefit, experts should be consulted to ensure those benefits are protected. Also, the injured worker may have questions; for example, he might want to know how much Medicare would provide for special equipment, such as wheelchairs or home modifications.
  • Tax/financial experts. These experts may be needed to answer questions about future issues that might arise, such as the tax consequences involved in setting up a home business.

 

 

Conclusion

 

Structured settlements offer peace of mind for injured workers seeking a long-term income stream. They are tax free, customized, and carry no risk, as they are not subject to the whims of Wall Street.  By working closely with the injured worker and assembling all the appropriate parties, a structured settlement can be a win-win for all involved.

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, Principal, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Surveys Results: People Often Regret Choice of Lump Sum Settlement

There is significant opportunity to increase the level of satisfaction and security in workers’ compensation settlement cases.  According to a pair of studies, it’s just a matter of better education regarding the use of Structured Settlements.

 

A study three years ago echoed the findings of a survey six years before; when people are informed about the benefits of structured settlements, the majority will at least consider the option. The reports also show that the people who are most influential to individuals faced with an injury award — attorneys — are either unaware of, or just don’t tell their clients about alternatives to lump sum payments. The surveys also found that many people who choose lump sum payments become increasingly sorry about that choice as the years go by.

 

 

Many Not Aware Of Structured Settlements

 

People often speculate about how they would take the millions they would get if they won a state lottery. Often the response is they would take the cash upfront instead of getting an income stream via an annuity.

 

The situation is similar for an injured person who is offered money to finalize a workers’ compensation or other type of claim. While a judge may mandate a structured settlement in rare cases, the injured person typically has a choice between a lump sum payment minus taxes, or a stream of tax-free payments paid out over the long term to pay their future medical expenses and basic living needs.

 

Structured settlements became legal as a way of compensating injured individuals in 1982. But the surveys show many people have little or no idea they exist or how they work.

 

 

Survey 1: 73% Choose Structured Settlement When Informed of Benefits

 

The first survey, sponsored by American General Life Structured Settlements was conducted in the Fall of 2007 and included more than 1,000 Americans, most of whom had not received or been connected to anyone with a major injury claim. They were given two scenarios and asked to choose a payout option.

 

  • Scenario I: A 35 year old married worker with three kids is paralyzed from the waist down following an auto accident and is ultimately awarded $750,000. The respondents were given no information about structured settlements vs. lump sum payments, but were asked how they would take the money.

 

Sixty-five percent said they would take the lump sum payment while the other 35 percent opted for the structured settlement. Nearly half of the lump sum respondents did so because they believed they could make their own financial decisions. Another big reason was to pay off major debts, along with the flexibility of not being locked into an annuity.

 

  • Scenario II: The 22-year-old widow of a husband killed in a construction accident is offered $2.5 million. But in this scenario, the respondents were given descriptions of structured settlements vs. lump sum payments.

 

The vast majority — 73 percent chose the structured settlement. Their main reason was that it provided a regimented stream of income for monthly expenses.

 

Interestingly, both groups cited two of the same reasons for their decisions: “guaranteed financial independence,” and “to avoid living on public assistance.”

 

 

More Than 50% Said Never Informed of Option

 

About 20 percent of the respondents to the survey either had been injured or had a family member who was. Most of them — 86 percent — had chosen a lump sum. More than half of them did not know what a structured settlement was, and said their attorneys had not informed them of the option.

 

Sadly, the majority of those who had taken lump sums said the money was gone. That mirrors the findings of a survey conducted in 2013, in which people who took lump sums found they had less money than expected as time went by.

 

 

Survey 2: Wished Had Taken At Least Some In A Structured Settlement

 

The second study involved 400 injured workers who had received settlements of at least $100,000 within the prior 10 years. It was produced by Prudential Global Strategic Research in conjunction with Prudential Structured Settlements. The sponsors wanted to know why someone would choose either payout option.

 

 

Lump Sum Chosen for Perceived Financial Independence & Pay Large Debts

 

The main reasons injured workers said they took a structured settlement were the tax advantages and a guaranteed rate of return, according to the Prudential study. Of those who said they were “very familiar” with the structured settlement option, 75 percent said they had considered it.

 

Those who opted for lump sums had done so largely because they hadn’t been informed about structured settlements. About 20 percent said the insurer had not offered a structure settlement as an option.

 

 

Financial Independence & Pay Off Debts Goal Most Likely To Regret Decision

 

Those who took the lump sums also said they did so to have financial independence and to pay of large debts. However, they were the most likely to regret their decision later and many said they wished they had taken at least some of it in a structured settlement.

 

The survey asked recipients of lump sum payments about their expectations regarding the money they had, within the first year of receiving the payment, 1 – 3 years after, 3 – 5 years after, and 5 – 10 years after getting the cash.

 

Within the first year, 35 percent said they had “much more than I expected,” and 5 percent said they had “must less than I expected.” But the figures were nearly reversed later. Among those who had received lump sums 5 – 10 year prior, just 6 percent said they had “much more than I expected,” while 25 percent had “much less than expected.”

 

 

Conclusion

 

Despite the belief by many that they can best manage a large sum of money, the reality is often different. Some spend money much more quickly than they envision; others make poor investment choices; while others discover that paying off large debts does not always result in financial independence.

 

Structured settlements are a compelling option for injured workers and others who want financial security throughout their lives. However, the lack of awareness and misconceptions lead too many people to choose lump sum payments, only to regret the decision later. It behooves all advisers of injured workers including attorneys, claims handlers, employers, and the population in general to understand the different payout choices and opt for the one that offers the best benefit.

 

 

Author Michael Stack, Principal, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Leverage Emotional Intelligence For Successful Claim Settlements

 “Today is a new day, the first day of the rest of your life.” Each of us has certainly heard this statement proclaimed sometime throughout our lives – in the classroom, office, on an athletic field or even possibly during a therapy session. For injured parties, facing the realities of today and the uncertainties of tomorrow are often more painful than the physical injuries themselves.

 

As professionals, this is a simple yet important concept to understand as it drives the value that comes with the use of emotional intelligence when posturing settlements.

 

 

Emotional Intelligence In Settlement Process

 

Emotional intelligence is an ability to recognize, understand, manage and influence one’s emotions and the emotions of others. In practical terms, it is a combination of these abilities along with the use of intuition and street smarts. Regardless of how one chooses to define the concept, incorporating the use of emotional intelligence is important given its value in the settlement process.

 

With all of the priority business demands inherent to managing claims, litigation and settling claims, even if one had the time to fully appreciate the value of applying emotional intelligence, how would one use this to generate better results? Most of us are too busy to even pause for a moment and think about this question. So, please, allow me a minute to offer a few simple thoughts.

 

Unlike most service providers who deliver products and services for the betterment of injured parties, structured settlement consultants are uniquely positioned. Oftentimes, structured settlement consultants are very engaged in the litigation process and meet the injured parties. These opportunities open the door for the use of emotional intelligence which is advantageous to all.

 

 

Settlement to Address Immediate and Future Needs

 

From an injured party perspective, structured settlement professionals address immediate and future needs and provide viable options to bridge the gap to settlement. As objective settlement advisors, they use emotional intelligence to customize creative settlement proposals designed to address the financial needs and uncertainties of tomorrow.

 

From a claims and litigation management perspective, both defense and plaintiff, structured settlement professionals maximize the benefits and value that comes with the settlement dollars paid and assist with achieving desired outcomes. The efforts of structured settlement professionals offer benefits to all parties involved in the settlement process.

 

 

“Color in the Quotes”

 

So, next time you engage a structured settlement consultant, look not at the color of the quotes but rather the “color in the quotes” – in part the product of their use of emotional intelligence.

 

“Engage a structured settlement professional, today.”

 

 

Author: Duke T. Wolpert, Ringler.  Duke is a Broker and Settlement Consultant (CSSC) who owns and operates Ringler Associates of Pennsylvania Inc.  After joining Ringler in 2012, Duke served as Sr. Vice President of National Marketing and was responsible for new business development, national account management, national marketing and corporate partnerships – as member executive management team of the organization. Contact: https://ringlerassociates.com/consultants/duke-wolpert/

 

5 Structured Settlement Scenarios You May Not Be Utilizing

A structured settlement creates a ‘win’ for all parties to a workers’ compensation settlement; the employer, the payer, the injured worker, and the attorneys. So when is the right time to use a structured settlement?  Conventional wisdom is that structured settlements should be used as a financial tool when the settlement value reaches an arbitrary number such as $100,000.  This business-as-usual approach has made countless workers’ compensation programs engage in practices that only drive up the cost of doing business and have a negative impact on their bottom line.  Now is the time to reconsider your approach as to the right time to use and consider a structured settlement.

 

 

What is a Structured Settlement?

 

A structured settlement is a valuable piece of a comprehensive claim settlement strategy.  The claimant will receive the full value of their settlement over a period of time via a combination of a one-time lump sum payment paid at the time of settlement, plus annual annuity amounts.  Structured settlements come in various forms and can include the following payment mythologies that meet a desired end.

 

  • Deferred Lump-sum Payments, which include larger than the regular periodic payments via a schedule paid at pre-determined dates;
  • Flexible Settlement Plan, which allow flexibility for claimants requiring various special needs; and
  • Period Certain Annuity, which typically include larger periodic payments that end at a date or age certain.

 

 

5 Structured Settlement Scenarios

 

 

1. Realizing Cost Savings in Low Dollar MSAs

 

Consider the scenario with a forty-six year old employee who is currently a Medicare beneficiary.  He sustains a low back injury, disputes arise in the claim, and litigation occurs.  The matter is ultimately resolved with an MSA allocation of $38,893.

 

Using a structured settlement in this case allows the insurance carrier to realize substantial savings.

 

 

Benefit Cost Guaranteed Yield Expected Yield
 

Cash to Set Up MSA

 

$2,357

 

$2,357

 

$2,357

 

Annual Payment to Replenish MSA Account*

$22,357 $0.00 $36,529
 

TOTAL

 

$24,714

 

$2,357

 

$38,893

 

* Settlement Based on CMS Approval Male, Date of Birth 9/19/1969 Rated Age: 50. $1,141.00 per year beginning 1 year from approvals, payable for 32 years, only if living

 

**Example provided by Ringler

 

 

Proposed Total MSA Amount:

 

$38,893.00
Cost of Seed & Annuity Payments:

 

$24,714.00
Savings Realized using Structured Settlement $14,179.00

 

Using a structured settlement relies on an annuity mechanism that guarantees a rate of return on the money invested via a life insurance program.  In this case, the workers’ compensation insurance carrier does not pay the full allocation amount.  Instead, they pay only $24,714 to fund the full MSA, resulting in savings of $14,179.

 

 

2. Alleviate Injured Worker’s Future Medical Challenges

 

Convincing the injured worker to settle can be a challenge. However, keeping the case open can often be much more problematic due to future medical issues. The insurance carrier’s Utilization Review guidelines must constantly oversee the medical care.  This often results in significant frustration from system friction, red tape, and denials of treatments and medications.

 

A structured settlement for future medical costs, working in partnership with a professional administrator, can give the injured worker the freedom to manage their medical treatment how they wish. The professional administrator sets up a dedicated bank account and gives the injured worker a unique card to use at his pharmacy and doctor’s office. The injured worker never touches the bill, receives discounts from bulk pricing, has freedom of choice, as well as security and peace of mind that his future medical issues will be handled appropriately and timely.

 

 

3. Bridge The Gap In Settlement Negotiations

 

Settlement negotiations often stall due to a difference in opinion on the value of the claim.  A common example is where the claims professional evaluates the settlement at $300,000, while the employee’s attorney, demands $400,000 to settle the claim. The claims professional and the employee’s attorney may be able to bridge the gap with a structured settlement.

 

A structured settlement bridges the gap with the injured employee receiving $400,000 while the insurer pays $300,000 (slightly more or slightly less) to be invested with a life insurance company in an annuity. This is possible with a structured settlement as the amount of the settlement is paid out over time with periodic payments. The injured employee and the employee’s attorney will receive the $400,000 over the time span set in the structured settlement (either the employee’s life time or a specific number of years).

 

 

4. Peace of Mind for Permanent Partial or Permanent Total Disability

 

Anytime an injured worker experiences a permanent partial or permanent total disability it creates an immeasurable impact on their life and that of their family.  In addition to ongoing medical expenses, the loss of the income raises questions about immediate needs, such as modified vehicle replacement and home modifications. There can also be additional concerns about long-term expenses such as college funding for children.  Structured settlements can be used to pay for these and other bills, providing a comfortable lifestyle for the family following a workplace injury.

 

 

5. Eliminate Contingency-Fee Attorney Income Peaks & Valleys

 

Many attorney’s work on a contingency fee basis resulting in significant peaks and valleys in income based on the outcome of their cases.  An attorney who leverages a structured settlement for their fees can set up a deferred compensation plan guaranteed to cover their annual operating budget, and freeing the attorney to focus on current and new cases.

 

 

Conclusions

 

It is rare that an injured worker — or anyone — has the money management skills and discipline to make a large sum of money last a lifetime, especially when there are medical issues to consider. In fact, research shows most people have depleted the entire lump sum after just 5 years. A structured settlement can give a guaranteed, tax free income stream for life.

 

Now is the time to reconsider your approach in how you are using structured settlements. A structured settlement provides the necessary “win” for all parties and can provide significant savings to every workers’ compensation program.

 

 

Author Michael Stack, Principal, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

Live Stream WC Training: http://workerscompclub.com/livestreamtraining

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Ringler Associates Announces New Chief Strategy and Business Development Officer: Melissa Evola Price

melissa RinglerAliso Viejo, California, July 5, 2016 – Ringler Associates Incorporated, the largest company of structured settlement advisors in the United States, is proud to announce that Melissa Evola Price, President of Structured Financial Associates (SFA), will be joining Ringler as Chief Strategy and Business Development Officer effective immediately.

 

Melissa Price, from the Greater Detroit area, has a longstanding reputation as a leader in the profession. She joined SFA in 1999 as a Structured Settlement Consultant/Corporate Marketing Consultant, expanding her role to National Account management, marketing/communications, IT infrastructure, corporate business development planning. Prior to that, she worked for eleven years in the Electronic Commerce (EC) industry, where she specialized in strategic planning, product management and sales management  focusing on emerging product markets. She    has

Life, Health and Accident Insurance licenses in multiple states and is a member of the National Structured Settlement Trade Association (NSSTA). She also holds the Certified Structured Settlement Consultant (CSSC) certification.

 

Ringler President and CEO Geoffrey E. Hunt commented, “We are absolutely delighted to have Melissa join our executive team.  Melissa has long been known as one of the distinguished thought leaders in our industry now dedicated to assuring Ringler reaches new levels of innovation and growth. I could not be more excited to have Melissa as my partner as we write the next chapters of Ringler as the continued leader in settlement advisory. Melissa has the intelligence, energy and creativity to make outstanding contributions to our future.”

 

Upon accepting the position Price says “I have admired Ringler as a company and I am very pleased to be able to become part of the leading firm in our industry. Joining Ringler provides an opportunity to work with Geoff, the leadership team and Ringler board to execute on our strategic plan that delivers the advances so necessary for us to continue advising our clients as well as injured parties and their families for the best possible outcomes.”

 

Hunt also notes that James M. Early, Executive Vice President and National Sales Director at Ringler has decided to retire at the end of the year, notifying the Ringler leadership several months ago.  Early will

 

continue working on the executive team to assist in the transition through 2016 and he will continue in an advisory role as he takes the reins as President of NSSTA in 2017.

 

And Ringler Chairman of the Board, W. Ross Duncan adds that, “Melissa is well respected across our profession and all of us at Ringler look forward to working with her in this important position as we look toward the future. We welcome Melissa, her husband Chris and his son, Harry, to the Ringler family.”

 

 

About Ringler

Ringler is the largest structured settlement company in the United States with over 120 Consultant in 61 offices since it was established in 1975. The Ringler team consists of over 250 experienced professionals who have earned the trust of all parties involved in the settlement process. Every Ringler Consultant takes an individualized, customer-focused approach to each case, backed by the strength and resources of a national brand to collaborate with injured people, attorneys and insurance professionals providing the best settlement solutions for claimants and their families. Ringler continues to expand its expertise in financial markets with a steadfast mantra of innovation and leadership in the profession.

Structured Settlements Protect Injured Workers & Save Work Comp Costs


Michael Stack:   Hello, Michael Stack here. Principal of Amaxx, founder of COMPClub, and co-author of “Your Ultimate Guide to Mastering Worker’s Comp Costs”. One of the core philosophies that I believe is that a better outcome for your injured worker will lead to lower worker’s compensation costs for your organization. Again, a better outcome for your injured worker will lead to lower worker’s compensation costs for your organization. And structured settlements certainly fall under that criteria and that philosophy. I have a special guest joining me today, the Senior Vice President of National Marketing at Ringler Associates, Duke Wolpert. Duke, thanks for joining me. I’d love for you to share with me what is a structured settlement, a little bit of context there.

 

 

What is a Structured Settlement?

 

Duke Wolpert:   Sure Mike, my pleasure. Thanks for having me today on the program. A structure settlement, essentially, is a cost-effective alternative to a lump sum settlement, a cash settlement. The series of tax-free future periodic payments, established between an insurer or self-insurer, and an injured party, a claimant or plaintiff, as part of either a worker’s compensation settlement, or a personal injury settlement.

 

They’re designed to protect and offer security to injured parties, so that they can meet their financial obligations in the future. Essentially, they bridge the gap to settlement, and any way parties can move closer to settlement by simply a change in the way the settlement is funded certainly is a step in the right direction.

 

Michael Stack: Absolutely. I agree with that, and I think these points you made are very good ones. Alternative to cash, really that lump sum settlement as an alternative to that, this point I think the tax free periodic payments in really a strong benefit to this, and then not to really be understated is that protection and security issue that really those structures offer throughout that settlement process, so thanks for sharing those point, Duke. Now, tell me, really how are these used then in the worker’s compensation space, really to leverage these benefits that you mentioned?

 

 

How Are Structured Settlements Used in Workers’ Compensation?

 

Duke Wolpert:   Yeah, what we’re seeing in the worker’s compensation space is a growing use of structured settlements, when it comes to the funding of Medicare set aside allocations. In addition to the MSA, the Medicare set aside allocation, oftentimes there are non-Medicare allowable expenses that aren’t part of the Medicare set aside allocation cost projection, that need to be quantified, and many times, we actually structure those non-Medicare allowable expenses as well as the MSA’s that we see.

 

On the indemnity side of the cases, we oftentimes are pulled into permanent and total claim scenarios, widow benefits, minors, in catastrophic claims, burns, amputations, traumatic brain injuries, for instance, are certainly cases that we’re asked to get involved in, to customize proposals that assist in meeting the financial needs of the injured parties in the future.

 

On occasion, we see situations involving injured parties with drug dependency, or competency issues, folks that for one reason or another cannot manage their own money, and there is certainly a value, the funding of those settlements with periodic payments and structured settlements.

 

Finally, the use of the structured settlement is growing in conjunction with the growth of Medicaid entitlement and the Medicaid programs in the states. In order to protect entitlements for Medicaid recipients, oftentimes the funding of the settlement has a direct correlation with their eligibility status, so the funding of a settlement would be using periodic payments, a structured settlement, certainly provides some protection to injured parties when it comes to ongoing incontinuity of Medicaid entitlement.

 

Michael Stack:   I think a couple of things that you said there … this competency issue, and we talked about it in regards to drug dependency, but I think we hear these stories so often of the lottery winners who get this huge sum of money, and a couple of years later, the people go bankrupt, and it’s just a very common story, and I think the value here is really in that protection, which we talked about in those benefits initially, and these catastrophic cases that Duke mentioned  … I think very valuable when you really put that in a context of leveraging this for those better outcomes for those injured workers, so let’s talk about that now, Duke. How do we now leverage these tools? How do we leverage this tool then in the context of really creating those better outcomes, both for the injured worker, and then creating those lower worker’s compensation costs?

 

 

How Do Structured Settlements Reduce Workers’ Compensation Costs?

 

Duke Wolpert: Absolutely. When we look at outcomes on the insurance, self-insured side, the primary payer side, oftentimes the use of structured settlements offers a reduction in the pay loss dollars in the claim, the lost dollars associated with a claim file. That oftentimes leads to improved cycle times or closing ratios for claims professionals, and what we find is that it at times avoids unnecessary expenses, especially in cases in litigation, either litigation costs or ancillary expenses related to the litigation, so clearly there’s value from a cost containment and cycle time claim inventory perspective, when it comes to the use of structured settlements.

 

Michael Stack:   I agree. Now, let’s talk about those injured workers, so we’re saving money through the use of these tools in loss dollars and the comparison of using an annuity versus a lump sum payment, and really leveraging the interest that leads to those savings. Now, let’s talk about those injured workers on that perspective and some of those benefits in creating a better outcome for them as well.

 

 

How Do Structured Settlements Lead to a Better Outcome For Injured Workers?

 

Duke Wolpert: Yeah, understanding that the plans that we develop are individually customized, they’re done that way to meet the needs of the injured parties, and every plan is a little different. In conjunction with the structuring and work up for the pricing of the Medicare set aside, there are oftentimes non-Medicare allowable expenses and other needs on the [inaudible 00:06:18] side that we need to address with the injured parties, as well as their own financial needs that will lead to the establishment of the creative design, the structured settlement proposal, and by doing that, it bridges the gap of the settlement. It gets the parties closer to resolving the claim in hand.

 

Michael Stack:   I think that really summarizes it nicely in the sense of really customizing those needs. I think when we talk about objections that injured workers might have, that would be a fear of mine certainly if I was offered a settlement, that I want to make sure that my needs are protected. As you said … I think one of the things you said there was I think was key, was it’s really individual to that individual person. Do they need some money up front to pay for certain things? How much money do they need over time? … And really customizing it to meet those needs, and as we said, at the same time saving those worker’s compensation costs for the payer organizations.

 

Duke, thanks for joining me. I’d love to just ask to share some final thoughts as we wrap up here.

 

 

A Structured Settlement Could Be the Last Check an Injured Party Ever Receives

 

Duke Wolpert: My final thought would be that we need to remember that an injured party who’s been disabled for a period of time, that receives a settlement, may not be going back to work. This could be the last check, the last payment that they receive for the rest of their lifetime, so protecting their financial future certainly is something that we want to be part of, and structured settlements absolutely do just that.

 

Michael Stack:   Yeah, I couldn’t agree more, and I think that point of really thinking that this is a last check that individual can receive is a very powerful point, and really leveraging this tool to create those better outcomes for that individual person, and as we mentioned, at the same time, lowering those worker’s compensation costs for the payer organizations. Thanks again, Duke for joining me today, and remember, your success in worker’s compensation is defined by your integrity, so be great!

 

 

Author Michael Stack, Principal, COMPClub, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder of COMPClub, an exclusive member training program on workers compensation cost containment best practices. Through these platforms he is in the trenches on a working together with clients to implement and define best practices, which allows him to continuously be at the forefront of innovation and thought leadership in workers’ compensation cost containment. Contact: mstack@reduceyourworkerscomp.com.

 

 

©2016 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

Maximize Settlement Value And Solve Complex Problems With Structured Settlements

Structured settlements offer all parties in workers’ compensation cases an opportunity to maximize the settlement value of the case and have creative solutions to solve complex problems.  Before using a structured settlement in your case, it is important to understand key terms and how they work.

 

 

Key Structured Settlement Terminology

 

The use of structured settlements include a complicated vernacular.  Using terms incorrectly can result in delay or having a settlement fall apart.  Consultation with a structured settlement representative is key.

 

  • Annuitant: A person who receives the benefits of an annuity.
  • Annuity: A specified income payable at stated intervals for a fixed or a contingent period, often for the injured employee’s life.
  • Beneficiary: The injured employee who receives the payments from the structured settlement.
  • Deferred Lump-sum Payments: These are payments to the injured employee, which are larger than the regular periodic payments, and are given at pre-determined dates in the future to cover the cost of a college education, car replacement, home remodeling, etc.
  • Flexible Settlement Plan: A structured settlement that takes into consideration the needs of the injured employee, both financially and medically, while also addressing the cost of the structured settlement.   A flexible settlement plan includes the planning necessary to achieve the goals of the injured employee while maintaining control of the cost of the structured settlement for the employer/insurer.
  • Period Certain Annuity: When the injured employee knows that in the future there will be additional income from Social Security, a pension, IRAs, 401Ks, etc., the injured employee may elect to get larger payments from the structured settlement annuity by shortening the time period the annuity will be paid to age 65 or some other cut-off point.
  • Periodic Payments: Settlement payments that the injured employee receives based on an agreed payment schedule, whether it bi-weekly payments, or monthly payments, or quarterly payments or annual payments.
  • Qualified Assignment: A qualified assignment is the transfer from the workers’ compensation insurer to the life insurance company, the obligation to pay the future periodic payments of a structured settlement.  The obligation to pay qualifies for favorable income tax treatment as the obligation arises out of an injury.

 

 

Correctly Using a Structured Settlement

 

The use of structured settlements is made possible by special provisions within the Internal Review Code.  When done properly, they can provide a claimant with a consistent flow of money that is not taxable under the Code.

 

When using a structured settlement, it is important to be aware of the special tax rules that apply.  A structured settlement must be established by:

 

  • An agreement for a party to accept periodic payments for personal damages that are excludable from gross income as set forth in 26 U.S.C. §104 (a) (2); or
  • An agreement for a party to accept periodic payments for applicable workers’ compensation benefits that are not considered income per 26 U.S.C. § 104 (a) (1); and
  • The payments are also those as described in subparagraphs (A) and (B) of Internal Revenue Code Section 130(c) (2), or 26 U.S.C. § 130(c) (2).

 

These periodic payments must also be paid as follows:

 

  • A party to personal injury type lawsuit or workers’ compensation claim; or
  • A party who has assumed liability for the periodic payments under a qualified assignment per 26 U.S.C. § 130.

 

Conclusions

 

Structured settlements remain an important tool in settling workers’ compensation cases.  It is important to understand key terminology and how they work before using one in your settlement.

 

 

Author Michael Stack, Principal, COMPClub, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and founder of COMPClub, an exclusive member training program on workers compensation cost containment best practices. Through these platforms he is in the trenches on a monthly basis working together with clients to implement and define best practices, which allows him to continuously be at the forefront of innovation and thought leadership in workers’ compensation cost containment. Contact: mstack@reduceyourworkerscomp.com.

 

 

©2015 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

Settling the Difficult Cases with Structured Settlements

Complex workers’ compensation cases require creative thinking.  One tool that can help resolve these cases in an innovative manner is a structured settlement.

 

 

What is a Structured Settlement?

 

A structured settlement is a financial tool purchased through a structured settlement broker.  When the structured settlement is purchased as part of a workers’ compensation settlement, the injured employee will receive periodic payments under an agreed schedule rather than a lump sum payment.

 

These periodic payments can come in various forms.

 

  • Deferred Lump-sum Payments: Payments are made to the employee, which are larger than the regular periodic payments.  This agreement is structured under a schedule consisting of pre-determined dates.
  • Flexible Settlement Plan: Payments under this arrangement take into consideration the needs of the injured employee by addressing the cost of the structured settlement.   A flexible settlement plan includes the planning necessary to achieve the goals of the injured employee while maintaining control of the cost of the structured settlement for the employer/insurer.
  • Period Certain Annuity: In this type of structured settlement, the injured employee may elect to get larger payments by shortening the time period the annuity will be paid to age 65 or some other cut-off point.

 

 

Using a Structured in Your Settlement

 

Imagine you have a troublesome case with high exposure and the settlement negotiations between the plaintiff attorney and insurance company reach an impasse.  The solution is a structured settlement.

 

The parties agree to a settlement amount of $500,000, which will be settled via a structured settlement.  By working with a broker, the insurance carrier was able to purchase an annuity through a life insurance company.  The broker was also able to secure a rated age for the injured party that further drove down the actual cost of the annuity due to co-morbid conditions of heart disease and diabetes.  The final terms are as follows:

 

  • Agreed upon settlement amount: $500,000
  • Savings via rated age: $98,000
  • Savings via annuity payments versus the lump sum: $126,000

 

  • Total savings: $224,000
  • Total payments to the Employee: $500,000

 

Everyone Wins with a Structured Settlement

 

How does the employee win?  In this case, the employee receives the full value of the settlement.  By receiving periodic payments, they will have better management of their settlement funds via guaranteed cash flow over their life expectancy.  The settlement money also remains tax-free.

 

How does the employee’s attorney win?  They were able to be a zealous advocate for their client while at the same time being creative.  Not only do they have a satisfied client, but they also helped their client have financial stability.

 

How does the insurance carrier win?  The carrier wins because they are able to free up funds that would otherwise be used for a settlement paying a lump sum.  The claims management team can now concentrate on other troublesome files.  They will also receive recognition for being efficient and creative by settling an annoying claim.

 

 

 

Author Michael Stack, Principal, COMPClub, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and founder of COMPClub, an exclusive member training program on workers compensation cost containment best practices. Through these platforms he is in the trenches on a monthly basis working together with clients to implement and define best practices, which allows him to continuously be at the forefront of innovation and thought leadership in workers’ compensation cost containment. Contact: mstack@reduceyourworkerscomp.com.

 

 

©2015 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

Settlement Issues and Options to Consider

“The only good file is a closed file!”  This is a saying that echoes across claim management teams around the country.  Reaching that goal is filled with barriers and pitfalls that everyone working on a file should take notice of when working toward this goal.

 

 

Drafting the Perfect Settlement Agreement

 

While legal counsel draft most settlement agreements in workers’ compensation claims, it is important that claim professionals do not assume the agreement is ready for circulation.  A complete review of every agreement is necessary before it can be sent to opposing counsel.  Here are some factors to consider when reviewing this important document.

 

  • Review the document to make sure it meets your expectations and authority. It is important to double check payment amounts and verify the items you intend to close-out are actually referenced in the agreement.  Remember that most courts interpret settlement agreements consistent with contract law principles.  As a result, this document will be interpreted against the party who drafted it if found to be ambiguous.

 

  • Pay particular attention to representations and statements of material fact. This is a requirement in most jurisdictions.  All statements should be in clear and concise sentences and avoid legalese.  It is also important to make sure elements such as an average weekly wage and the itemization of benefits already paid are stated in the document, if required.

 

 

Other Important Considerations

 

In workers’ compensation claims, the law has evolved to the point where there are a number of other issues to consider.  These considerations include potential subrogation rights, the length or term of a medical close-outs (e.g. – closure of medical benefits “to-date” or for a certain period) and issues concerning the disability status of a claimant.  Concerns regarding Medicare’s interests is another hot-button issue.

 

 

Dealing with Medical Providers

 

The rights and interests of medical providers and insurers is also an important issue to consider.  In some jurisdictions, these parties have special rights of intervention that must be considered and outlined in a settlement agreement.  In other parts of the country, these stakeholders have little to no recourse if they are not involved in a settlement.  Be sure to know the law in the jurisdiction you are settling a case.  Consultation with legal counsel may also be required.

 

 

Use of Structured Settlements

 

Structured settlements are a cost effective and creative tool parties can use to settle workers’ compensation cases.  They also add value to just about any settlement and provide a “savings” for insurance carriers.

 

Prior to considering a structured settlement, it is important to understand the special tax rules that apply.  This information can be obtained from a broker who can also assist in presenting options based on the facts of the case.

 

  • Benefits to the Injured Party: Claimants can benefits from a structured settlement in their workers’ compensation case as it spreads the payment of their settlement out over a period of time and provide for a consistent flow of non-taxable income.  They can also earn interest on their settlement proceeds at a rate higher than they would receive if their money was placed in a traditional savings account.

 

  • Benefits to Insurance Carriers: Use of a structured settlement “reduces” the amount of money spent on a settlement and provides for creative settlement options.  This is especially helpful in high exposure cases, but can be used effectively in typical cases.

 

  • Benefit to Attorneys: Structured settlements benefit plaintiff and defense attorneys.  It also provides for them to reach a creative settlement and obtain a “win” for their client(s). Interesting enough, attorneys also find value in structuring their own attorney fees.

 

When using a structured settlement, parties have a number of different payment options.  These include annual payments based on the claimant’s life expectancy and the amount the case settlement amount.  Payment option can be made through the end of person’s life, or for a fixed period of time.  Use of a structured settlement can also be used to fund a Medicare Set-aside.

 

Here is an example of how a structured settlement can provide value, savings and creativity to your case:

 

The parties agree to a settlement amount of $500,000, which will be settled via a structured settlement.  By working with a broker, the insurance carrier was able to purchase an annuity through a life insurance company.  The broker was also able to secure a rated age for the injured party that further drove down the actual cost of the annuity due to co-morbid conditions of heart disease and diabetes.  The final terms are as follows:

 

  • Agreed upon settlement amount: $500,000
  • Savings via rated age: $45,000
  • Savings via annuity payments versus the lump sum: $106,000
  • Total savings: $151,000
  • Total payments to the Employee: $500,000

 

 

 

Vacation of Settlement Agreements

 

Having a settlement agreement at some point in the future is the last thing any defense attorney or claims management professional wants to happen.  While it is impossible to draft an ironclad agreement in most jurisdictions, there are steps that can be taken to prevent this from happening.

 

While the law varies, most states allow a settlement agreement to be vacated if there is a mutual mistake of fact, newly discovered evidence, fraud or a substantial change in the claimant’s condition.  In order to avoid this from happening, several best practices can be included in an agreement to prevent this from taking place:

 

  • Include a series of questions in the agreement that outline the claimant’s affirmative understanding of the agreement. It is also suggested to have the claimant affirm in writing that they reviewed the entire document, had it explained to them by their attorney, they understand the seriousness of their injury and that the condition(s) may worsen in the future.

 

  • Dealing with pro se litigants should make claim management professionals to take extra caution in their agreements. In order to avoid problems in the future, they can suggest the agreement be reviewed by an attorney or request the matter be placed on for a hearing in front of a compensation judge where the claimant will need to acknowledge the settlement terms “on the record.”

 

 

Conclusions

 

Settling workers’ compensation claims in a cost effective manner is the dream of every claim professional. Structured settlements are valuable tools to incorporate in the settlement strategy and negotiation process. Often times, a good claim is a settled claim.

 

 

Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. He is an expert in employer communication systems and helps employers reduce their workers comp costs by 20% to 50%. He resides in the Boston area and works as a Qualified Loss Management Program provider working with high experience modification factor companies in the Massachusetts State Risk Pool.  He is co-author of the #1 selling book on cost containment, Your Ultimate Guide To Mastering Workers Comp Costs www.reduceyourworkerscomp.com. Contact: mstack@reduceyourworkerscomp.com.

 

©2015 Amaxx LLC. All rights reserved under International Copyright Law.

 

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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

Ringler Associates: Celebrating 40 Years in Structured Settlements

Since 1975, Ringler Associates has been a huge player in the structured settlement industry and this year, celebrating a 40th Anniversary! On this Ringler Radio podcast, host Larry Cohen joins colleague,  Mike Casey  and one of the original five Ringler hires, Cecil Matthews, as they discuss  the structured settlement industry and how far they have come, share some personal stories about the people they have met along the way and pay tribute to a pioneer in the industry, David V. Ringler.

 

Click here for audio excerpt

 

Click here for the entire podcast  

 

 

About Ringler Associates

 

Ringler Associates, Inc. is the largest structured settlement company in the United States with over 140 consultants in more than 60 major cities. Established in 1975, the company is a team of experienced professionals who have earned the trust of all parties involved in the structured settlement process. Every Ringler Associate takes an individualized, customer-focused approach to each case, backed by the strength and resources of a national company to collaborate with injured people, attorneys and insurance professionals providing the best settlement solutions for claimants and their families.

 

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