Look to Rated Ages For Realistic Settlement Amounts

November 12, 2019 by

rated agesA well-developed settlement plan can be a win-win for all parties to a workers’ compensation claim. The injured worker is assured of having enough money to meet his future medical – and possibly other – needs for a lifetime; the employer/insurer gets the long-term claim off the books with the knowledge that the employee will be financially set.

 

Several elements are imperative in designing a settlement that is fair to all parties involved, such as:

 

  • Structuring the Medicare Set Aside, to ensure Medicare’s interests are addressed
  • Properly projecting medical costs, to ensure the worker has enough money to pay for future care related to the injury while also making sure what is included is appropriate and not inflated
  • Pricing out future prescription drug costs
  • Providing a system of ongoing support after the settlement, such as professional administration

 

Another vital component to is make sure the injured worker has enough money while also avoiding unnecessarily high costs is the life expectancy of the injured worker. It’s a factor used to determine the settlement amount.

 

 

Life Expectancy and Age Ratings

 

Structured settlements are a component of a comprehensive settlement plan, and vehicles that provide periodic payments agreed to by the parties. They are money streams from annuities that guarantee future payments according to a determined schedule issued through life insurance companies.

 

As with life insurance, life expectancy is a prime consideration in determining a realistic amount. Imagine a 35-year-old person in good health who applies for a $50,000 life insurance policy, compared with a 50-year-old who applies for the same policy. Chances are the 35-year-old will live longer, and pay premiums, far longer than the 50-year-old. The insurance company, therefore, charges a higher premium to the 50-year old than the younger person. Annuities for structured settlements are figured in the same way.

 

But ‘life expectancy’ is not solely dependent on a person’s chronological age. It is an estimate of longevity that also includes such things as family history, the absence or presence of high-risk activities, and comorbid conditions. The 35-year-old who smokes, has diabetes, and heart disease may have a shorter life span than a 50-year-old who is physically fit and takes care of himself.

 

There are many actuarial tables and ways to determine life expectancy. It is not, however, an exact science. Therefore, a person’s life expectancy may have many different estimates from different actuaries.

 

A realistic settlement amount should include an appropriate estimate of a person’s life expectancy. If the payments need to cover a shorter life expectancy, the cost of the benefits will be less than for someone with a longer life expectancy.

 

Life insurance underwriters can calculate life expectancy using medical records, address, and comorbidities. Because the process is not exact, structure settlement companies typically reach out to multiple life insurance companies for rated ages.

 

Any workers’ compensation claim being considered for settlement should include rated age estimates. It’s important to note that comorbidities that may impact life expectancy need not have any association with the person’s workplace injury. It is simply a medical assessment of a person’s life span.

 

 

Examples:

 

Let’s say the life expectancy of an average male is 77. So a 50-year-old in good health would have a life expectancy of 27 years. However, if that person has hypertension, alcohol abuse, and other physical issues, he may have a life expectancy of just 15 years. That would eliminate 12 years from the expectation of future medical and indemnity costs in the settlement.

 

For another, more specific example, let’s take a 22-year-old male with a myriad of comorbidities. Where the ‘normal’ life expectancy would be 55 additional years, let’s say it is reduced to 30 additional years.  When calculating the reserves and future cost projections, 25 years are eliminated from the settlement value.

 

 

Using Rated Age Information

 

Armed with various rated-age estimates, the settlement can be figured in several ways:

 

  • Reduce the settlement amount. A settlement based on 34 years life expectancy would be much less than 57 years. So, a lower, more reasonable amount can be proposed to the injured worker.

 

  • Limit the exposure. This is a strategy payers can use to lower their risk. Rather than offering a lower amount, the proposed settlement says that if the injured worker passes away within a certain timeframe, an annuity will be refunded to the employer/insurer.

 

  • Don’t settle. If the rated age is significantly different from the normal life expectancy, it might make more financial sense for the payer to continue providing benefits for the injured worker’s lifetime.

 

 

Conclusion

 

Settling a workers’ compensation claim can be a complex process. It must be enough to give peace of mind to the injured worker and be affordable and realistic enough for the payer. Getting realistic estimates of a person’s life expectancy can result in a profound difference in the amount that is actually needed.

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is a 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/

 

©2019 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.

Filed Under: Structured Settlements

What Is Likely The Problem With Your Work Comp Program

February 18, 2019 by


It was late one March evening and a taxicab going over 115 miles per hour smashes into the back of a police car. Instantly setting that car on fire, and the officer was trapped inside. Hello, my name is Michael Stack, I’m the CEO of AMAXX.

 

 

Burning Shield – Jason Schechterle

 

This past week I spent several days at the annual meeting of the settlement planning organization Ringler, he’s one of the partners on my website here at Reduce Your Worker’s Comp. Now it was a great couple of days spent networking and learning and sharing ideas, but one of the highlights of that conference or of that meeting was the keynote presentation given by Jason Schechterle, who was the officer who was inside of that car hit by the taxicab. Now Jason experienced severe burns on his face, his neck, his head, and over 40% of his body. He underwent over 50 surgeries to recover from that event. His message was powerful in his keynote presentation, and the book that he wrote called the Burning Shield. I recommend checking it out.

 

 

Accountability In This Life

 

Jason’s message had a lot to do with taking an honest look at our circumstances, and taking accountability for where we stood and what happened. There were so many powerful lessons and inspiring keynotes that he gave throughout the course of that presentation. The one that struck me the most went like this, he said good or bad, we have an accountability in this life. Why me is not a question is not a question we can ask. He said good or bad, we have an accountability in this life. Why me is not a question we can ask. Good or bad, we have an accountability in this life. Why me is not a question we can ask. That lesson and that sentiment is so applicable to so many areas of our life. Today we’re gonna talk about how that applies to your work comp program.

 

 

You Are Likely Looking At the Problem

 

What I see so often, particularly from employers, is that we want to blame everyone else. It’s the adjuster, they have too high of caseload. It’s that stinking doctor, he’ll never release my employee to work or that case manager’s not getting it together. Or my attorney, he’s a real pain in the butt or she’s a pain in the butt. Or that investigator, if that investigator would just have done their job we wouldn’t be in this mess that we’re in right now. It’s such a common sentiment that we feel in our work comp programs, and generally within our own lives. Per Jason’s lesson, we need to think about how that applies to our lives, and how that applies to our work comp programs as well. Because when you wake up in the morning and you’re looking in the mirror, you need to realize that you’re likely looking at the problem.

 

Again my name is Michael Stack, I’m the CEO of AMAXX. Remember your work today in worker’s compensation can have a dramatic impact on your company’s bottom line. But it will have a dramatic impact on someone’s life. So be great.

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is a 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: https://blog.reduceyourworkerscomp.com/

 

©2019 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.

 

Filed Under: Structured Settlements

4 Reasons to Include Experts Early in Workers’ Comp Settlements

February 5, 2019 by

settlement consultantSettling workers’ compensation claims is — or should be — a major goal for payers and employers. Ideally, you want the injured worker to return to function and, if possible, work. At the very least, both you and the injured worker want out of the workers’ compensation system — the worker so he can move on with his life, and the payer/employer to get the claim off the books.

 

 

The Key to Successful Settlement is Starting Early

 

The key to successful settlement is starting early in the claim history.  However, all too often there are claims that sit on the books for years, adding up to devastation for the injured worker and significant costs for the payer/employer. Settling claims can be fraught with uncertainty and peril — unless you work with the right experts. While it’s impossible to find one person or even one company with expertise in all facets of settlements, there are experienced organizations that specialize in one area of settlements and have wide-reaching connections with authorities in other relevant areas.

 

 

What is a Settlement Consultant?

 

A settlement consultant is a settlement expert with knowledge and access to various settlement tools to address the most challenging workers’ compensation claim issues. These experts can be brought into the process early on, so the settlement is set up appropriately.

 

Rather than just running quotes, the settlement consultant should act as the general contractor in identifying, bringing and managing the best experts to the table to address the issues preventing a positive outcome for all parties in the case.

 

 

Whole Person Approach

 

Industry stakeholders are increasingly seeing better outcomes when they treat the injured worker holistically, rather than focusing only on the specific injury/illness. Ignoring issues such as comorbidities and psychosocial factors only prolong claims and end up costing more.

 

In the same way, injured workers who are settling their claims must be viewed in their entirety, since each person is unique. That means in addition to taking care of the person’s ongoing and future medical needs, other aspects of his wellbeing and life must be taken into account in order to have a successful settlement. A whole case approach is ultimately a win-win for everyone.

 

The amount of the settlement and how it will be distributed must be based on a variety of factors — not just the person’s injury. For example, some issues that may need attention are:

 

  • Retirement
  • Children with current or future educational needs
  • Legal concerns
  • Government benefits
  • Tax consequences
  • Insurance
  • Lien resolution

 

Uncovering the injured worker’s needs and desires should form the basis of the type of settlement and how the money will be distributed and overseen. The distribution of settlements can be done either by:

 

  • Lump sum, in which the entire amount is given to the injured worker; OR
  • Structured settlement, where the person gets money doled out in a variety of ways over a period of time.

 

The majority of injured workers, as well as others presented with the choice of collecting a significant amount of money, opt for the lump sum. Unfortunately, many of them end up running out of money way too early. In the case of an injured worker, that can present a slew of problems.

 

  1. Many injured workers who settle their claims have at least some of the money included in a Medicare Set-aside to ensure Medicare does not pay for medical care that should instead be paid through workers’ compensation. Determining whether and how an MSA should be created is highly complex and can be a nightmare for those without specific expertise in the area.

 

The Centers for Medicare and Medicaid Services (CMS) has specific reporting requirements for MSAs. Among them are:

 

  1. The money must be deposited into an interest-bearing account
  2. The funds must only be used for treatments related to the specific injury — not other medical issues
  3. The money can only be used for Medicare-covered expenses
  4. Payment must be made according to the appropriate fee schedule
  5. Each year, the injured worker must prepare and submit an annual accounting report to CMS
  6. A line item detail must be maintained for the duration of eligibility

 

Since failure to comply puts the injured worker at risk of being denied Medicare benefits, it’s crucial that an expert in managing MSA funds is involved.

 

  1. Other Benefits. Medicare is not the only government benefit program that could be impacted by a settlement. Medicaid and Supplemental Security Income (SSI) benefits can also be affected since settlements give the person additional assets. Injured workers who are receiving these benefits must be made aware of how a settlement could make them ineligible for these and other public benefits.

 

Special Needs Trusts were created by Congress for this very purpose. Some of the proceeds from the settlement can be placed in these vehicles to preserve and even extend the purchasing power of the settlement. Again, these are very complex and must be developed in conjunction with someone who has the expertise in state and federal statutes, public benefits and tax law.

 

  1. Durable Medical Equipment. In addition to the injured worker’s medical needs, he may need special equipment or even alterations to his home and vehicle. An expert on durable medical equipment (DME) should be involved in the settlement process to provide expertise on when, where and how much money will be needed.

 

  1. Family needs. In addition to the injured worker’s ongoing medical needs are those of his family. Children may eventually need money for a car and/or higher education. Parties to the settlement should understand this ahead of time to ensure it is structured in a way that will make these funds available when needed.

 

 

Engaging a Settlement Consultant

 

The best and more efficient time to engage a settlement consultant is before a claim has occurred.  The consultant should be a part of your team and ready to assist as needed.  When a claim comes across your desk and you say “ugh,” reach out to your settlement consultant and ask “what do you think?”

 

For legacy claims, find a block of with high reserves that seem to be going nowhere. Providing the name of the case, the adjuster, the claims liaison, attorneys, employer, TPA and a brief synopsis to the settlement consultant starts the ball rolling. With permission, the consultant can reach out to the various parties, gather information and report back as to which claims make sense for settling, as well as which cases do not and why.

 

 

Conclusion

 

Settling workers’ compensation claims should not be just about doling out a sum of money to an injured worker. An appropriate settlement starts with a settlement consultant early in the claim who builds a relationship with the injured worker and uncovers his needs, then brings in experts he knows who will be valuable contributors to the entire process. Working as a team with the injured worker creates a win-win for all parties.

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is a 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: https://blog.reduceyourworkerscomp.com/

 

©2019 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.

Filed Under: Structured Settlements Tagged With:

What To Expect From A Structured Settlement Consultant 

April 10, 2018 by

Injured workers who settle their claims are increasingly looking to settlement experts to help smooth the process. One of the key players in the equation is the structured settlement broker; the person who helps bring the case to resolution.

 

But there are many companies and individuals under the umbrella of ‘structured settlement broker,’ and they do not all function alike. It’s important to understand what they do — and what they can do — to ensure the settlement is truly a win-win for all parties, especially the injured worker.

 

 

Broker vs. Consultant

 

Planning a settlement is much more involved and complex than many may think. It requires more than just getting the money to the injured worker. There are many administrative and governmental issues that may need attention. Also, the injured worker may have needs beyond those of the immediate future must be taken into account. This takes a well-thought-out strategy.

 

The role of a structured settlement broker is evolving. The idea of setting up a transaction, signing the paperwork and then ending the relationship is over. The best companies to handle claims settlements are those that act as consultants to injured workers, understanding their needs and bringing in the best people to handle them.

 

Each settlement must be customized to fit a specific injured worker. Among the issues that may require involvement by experts are:

 

  1. Lien resolution.
  2. Financial planning.
  3. Tax consequences.
  4. Government benefit programs.
  5. Legal issues.
  6. Retirement planning.
  7. Insurance concerns.
  8. Future college education for children or grandchildren.

 

The consultant should know various settlement tools that can address these issues. For example, a consultant that works with insurance planners can provide comparative information on insurance products, such as disability or long-term care insurance. Having the benefit of an expert in Medicare Set-Asides available can ensure compliance and reporting issues are addressed, so future benefits are not put at risk.

 

These experts can be brought into the process early on, so the settlement is set up appropriately. Rather than just running quotes, the structured settlement consultant should act as the general contractor in identifying, bringing and managing the best experts to the table.

 

The consultant’s services should also be completely fee transparent, and come at no cost to the injured worker.

 

 

Examples of Issues and Players

 

Many circumstances may be overlooked in the settlement process. Working with an experienced structured settlement consultant can reveal and address those, such as:

 

  • Attorney Fee Deferrals. There are many ways to structure attorneys’ fees to allow money to be used in the future. Money deferred can be used for supplemental retirement funds, protection against inflation with cost of living adjustments, and potential avoidance of the Alternative Minimum Tax, for example.

 

  • Calculating realistic future medical costs. A top-notch structured settlement consultant should be able to show comparisons of the current costs of medications and procedures relevant to the injured worker with discounted costs offered through the consultants’ networks.

 

  • Trust funds. Trusts can be a great benefit to manage and protect assets, regardless of the person’s wealth level. Proper planning requires establishing a trustee, identifying beneficiaries, and determining how the assets should be held, invested and distributed. A qualified structured settlement consultant should be able to provide unbundled, transparent and competitive administrative and investment advisory pricing that will ultimately save money for the injured worker.

 

 

Collaborative Process

 

A successful structured settlement begins with a positive relationship between the injured worker and the consultant. A typical injured worker who is thinking of settling his claim is likely unaware of many issues he will face in the years ahead for which he is not prepared. By working closely and getting to know the injured worker the consultant can proactively identify concerns that may arise over the person’s lifetime.

 

The consultant and injured worker should work together as a team to find the optimal solutions. Bringing in the consultant as early as possible in the process allows him to become better acquainted with the injured worker and uncover his short- and long-term needs.

 

Once the settlement is reached, the consultant should ensure there will be someone to continue acting as a support and guide. They should have relationships with professional administrators who work with the injured worker throughout his life, guiding him through the many regulatory and medical mazes he will face.

 

 

Summary

 

The expectation for a structured settlement broker is a company that brings value beyond just the transaction itself. It should be a consultant that oversees the entire process, with the injured worker and his needs at its core.

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is a 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: https://blog.reduceyourworkerscomp.com/

 

©2018 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.

Filed Under: Structured Settlements

The Path to Engaging a Structured Settlement Consultant

February 20, 2018 by

The Path to Engaging a Structured Settlement ConsultantLegacy claims that have been sitting on the books for months, years or even decades can add up to major headaches and expenditures for workers’ compensation payers. Despite all attempts to close them, the injured worker involved just doesn’t seem to be interested in settling the claim.

 

The good news is, there are organizations solely committed to bringing even some of the most difficult cases to settlement and creating a true win-win for all stakeholders involved – including the injured worker.

 

Structured settlements are an alternative to lump sum settlements, which often fail to take care of the injured workers’ needs long term. Structured settlements can be set up to deliver varying amounts of money over the injured worker’s lifetime which can address all his current and future needs, such as:

 

  • Medical expenses
  • Living costs
  • Children’s education
  • Special needs trusts
  • Establishing a business
  • Home modifications

 

Working with an experienced, highly professional structured settlement consultant can be a lifesaver, for the injured worker, his family, employer and the payer.

 

 

Why Claims Don’t Settle

 

Structured settlement consultants specialize in settling claims. Typically the most difficult challenge in settling claims is addressing the injured workers’ concerns:

 

  • Concerned there will be no money
  • Not wanting to deal with Medicare compliance issues
  • Worried about losing support to navigate the medical system
  • Uneasy about the red tape involved in paying medical bills
  • Afraid of change

 

The emotional concerns of injured workers with legacy claims are just as, or even more important than the practical concerns, such as running out of money too soon. While injured workers may abhor dealing with the workers’ compensation system, they find some comfort in knowing they will get a consistent flow of money and that they have someone, the claims adjuster, who helps steer them in the right direction.

 

Part of the problem with trying to close these claims is that the injured worker has not had anyone fully explain the options available in settling. The claims adjuster may ask every few months whether the injured worker is interested in settling, but that person is not in the best position to develop a settlement plan. This process requires someone getting involved with the injured worker; understanding his particular needs, his family situation, and what he wants for the future. Engaging with an injured worker this way can reveal his true needs and concerns, which can lay the groundwork for a settlement.

 

 

Why a Structured Settlement Consultant

 

Structured settlement consultants don’t get paid unless and until the claim settles. Therefore, they work with all parties involved, rather than promoting one side or entity over another. For claims to settle, everyone involved must agree it is a win-win arrangement.

 

Your consultant knows that the easiest way to achieve a solution is by ensuring that all needs are addressed. Working under the premise that there is no one-size-fits-all, or cookie-cutter approach to settlements, the consultant creates a customized plan that takes into account any and all issues that may arise over a person’s lifetime. Using the flexibility of a structure allows for addressing these issues, but a good consultant will present a variety of solutions, sometimes even going beyond the structured settlement.

 

For example, the settlement might involve a large initial payout for the injured worker to pay off medical bills, attorney fees, liens, and other bills. It might then have an ongoing stream of specified monthly payments, and it might include a larger stream of payments designated for a certain time period if, for example, a child will reach college age and needs money for education.

 

 

Engaging a Structured Settlement Consultant

 

Often, a settlement consultant can help by finding a block of claims with high reserves that seem to be going nowhere. Providing the name of the case, the adjuster, the claims liaison, attorneys, employer, TPA and a brief synopsis to the structured settlement consultant starts the ball rolling. With permission, the consultant can reach out to the various parties, gather information and report back as to which claims make sense for settling, as well as which cases do not and why.

 

The best and most efficient time to engage a settlement consultant is as early as possible, rather than waiting until the 11th hour when the claim has been open for 22 years. As new cases come up, they too can be earmarked for possible settling.

 

 

Best Claims for Settling

 

Despite all the advantages of structured settlements, not all claims are ripe for them. Identifying these cases can be difficult to manage, thus it’s important to choose a consultant who understands both structured settlements as well as other settlement options, and which are most preferable for the case at hand.

 

Ultimately, choosing a company that employs objective Settlement Planners over Structured Settlement Brokers can be the best route. Settlement Planners are trained to offer a variety of solutions, rather than a single approach. However, whether you choose a Settlement Planner or a Structured Settlement Broker, these consultants are trained to think outside the box and are much more likely to bring legacy claims to settlement.

 

 

 

Conclusion

 

Structured settlement consultants are a great vehicle for getting long-term workers’ compensation claims off the books. By giving them minimal information on claims, they do the legwork and determine whether a claim is likely to be settled. They then go about getting a settlement agreement that meets the needs of all stakeholders.

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is a 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: https://blog.reduceyourworkerscomp.com/

 

©2018 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.

Filed Under: Structured Settlements

The Christina Grillo Case and Lessons Learned: Why Families Facing a Medical Malpractice Lawsuit need a Structured Settlement

January 18, 2018 by

The Christina Grillo Case and Lessons Learned: Why Families Facing a Medical Malpractice Lawsuit need a Structured Settlement

 

 

 

 

 


Speaker 1:This is Ringler Radio, where you get all the latest news and information about settlement solutions, litigation, mediation, and structured financial security from Ringler, the largest and most experienced company of settlement consults in the United States.

 

Ringler has been helping injured people and their families since 1975. Ringler Radio is made possible in part by American General, Liberty Mutual, MetLife, Mutual of Omaha, New York Life, Pacific Life, and Prudential.

 

Now, join Ringler Radio host, Larry Cohen.

 

Larry Cohen:Hello, and welcome to Ringler Radio, everyone. I’m Larry Cohen, the head of Ringler Northeast Operations, and we’re certainly glad you could join us again today.

 

Well, Christina Grillo Sullivan was born on January 9, 1982. In what should have been a normal delivery for her mother, Josephine, turned into an emergency C-section, leaving Christina severely brain damaged, resulting in cerebral palsy, seizures, and blindness.

 

Soon after, Christina’s family filed a medical malpractice lawsuit, citing negligence by her physician. But Life Care Plans estimated the lifetime cost of medical care for little Christina to have been an excess of $20 million. The defendant’s attorneys offered a structured settlement, costing $1,267,000 that would have, over the lifetime of the child, paid out well over $100 million dollars. Quite a tax-free ability for Christina to be taken care of.

 

But Christina’s lawyers rejected the structured settlement offer, and settled the case for a lump-sum cash payment of $2.5 million, from which they took a $1 million fee and $77,000 in expenses.

 

They also failed to protect the availability of governmental benefits and sadly, as we’ve seen so often before, the money, unfortunately, was gone within a few years, and the family left to pick up the pieces and pay millions for medical treatment.

 

Christina’s family nurtured and cared for her relentlessly and lovingly at home for 32 years until she passed away on September 17, 2014. Today on Ringler Radio, Christina’s mother, Josephine Grillo Sullivan, now the executive director of the Christina Grillo Sullivan Foundation, will share with us how she’s honoring Christina’s life by assisting families living with a brain-injured loved one.

 

We’ll also discuss the high-profile and precedent setting case of Grillo Vs ] and what its outcome has meant for others who are faced with a choice, at settlement, of taking cash or structure.

 

Joining me today in this discussion as my cohost is my Ringler colleague Anne Lawter, from the Troy, Michigan office. Anne has nearly two decades of experience in medical malpractice and personal injury litigation.So with that, welcome to the show Anne. Thanks for being my cohost.

 

Anne Lawter:I’m very happy to be here with you and Josephine today.

 

Larry Cohen:Thank you.

 

Josephine, welcome to the show. It’s a pleasure and an honor to have you here. We’re really looking forward to hearing what you have to say, today, about your daughter and about what’s transpired with your foundation.

 

Josephine G. S.:Thank you for having me. I really look forward to being your guest, with Anne, and your listeners.

 

Larry Cohen:Terrific.

 

Josephine, let’s begin by having you tell us a little bit about Christina and the impact she had on you and your family. She seems like an unbelievably fascinating and wonderful girl.

 

Josephine G. S.:Well, how long do you have Larry and Anne?

 

Larry Cohen:(laughs)

 

You take as long as you want. I’ll stop you when it’s time. Go ahead.

 

Josephine G. S.:She was an absolute angel here on earth. I visually see her laughing and smiling. They were absolutely contagious, and that’s without ever speaking a word. She just inspired so many people around her. It’s where we are today.

 

It didn’t matter that she didn’t speak a word. She taught us so much, truly: what was important in life, which is unconditional love. I guess she really gifted us with her innocent trust and her dependency upon us.

 

I’ll tell you what, Larry: she really, really taught us how very, very precious this life is, and not to take one moment for granted. I just can go on and on about her, but she truly taught us about hope and faith and that’s truly what’s gotten me this far in this moment in life.

 

Larry Cohen:She was a blessing. For your family to have nurtured her as you did is wonderful to see and you to be commended for that too.

 

Anne Lawter:Josephine, I understand that Christina’s birth is what led to a medical malpractice case. Is that correct?

 

Josephine G. S.:That is correct.

 

Anne Lawter:If you could, just give us an overview of the main portions of the case.

 

Josephine G. S.:It was an evening that I had arrived at the hospital and the nurse on duty wanted to send me home. As I recall, she was saying I was having Braxton Hicks which is false labor pains. The doctor was asleep down the hall but the nurse didn’t want to disturb him. And that was until Christina’s heart rate started to drop. And then the last thing I remember there was that my body was going into shock and jumping up and down on the gurney. Then I had awoken to two nurses talking an saying that my precious baby wasn’t going to survive the night. It had taken over seven minutes to resuscitate here.

 

So I guess three weeks in the hospital neonatal unit, the doctor came up to me and said that they had done all that they could and that they were terminating life support. They were going to administer Christina last rites, and I’m sitting here thinking back as I do from time to time … There was a room off the neonatal unit and we were put in there, my family and I. We were all to say goodbye, and gently passing her from one loving family member to the other and we were just kissing her soft little newborn face.

 

But she surprised us all. She started breathing on her own and obviously was left here to do all the things that she has done for so many. We actually lived in Fort Worth at the time, in Arlington, and I had heard about a case, an attorney, and had gone to see him in Houston. He said if the baby was still alive to take the case. They had came back and said that the nurse was credible and the hospital had made an offer of $50,000 and they suggested that I take it.

 

Looking at both of them I just said there was just no way I could care for Christina over her lifetime. Two weeks later I get a phone call and they told me to come pick up my papers, that they were withdrawing from the case.

 

So that’s when I had located new counsel which was Tom and Tommy and they too delayed about two years until the hospital saw the motion to dismiss and then at that they prepared the case for trial.

 

Larry Cohen:You know Josephine, through this trauma of the injury to your daughter and through the birth etc., finally you received an offer from the defendants’ attorney which included a tax-free structured settlement as a part of it and yet your own attorney rejected that offer and decided to go with a lump sum settlement. Of course that decision had some severe consequences as you moved down the road. Tell us about the impact of that decision on your family as you moved along. What was the impact?

 

Josephine G. S.:To clarify to your listeners, the attorney decision to go with that lump sum settlement, it was so insufficient to cover her basic medical needs, but also was not conveyed in writing, nor did I have a clue what a structured settlement was or the benefit of the weighted age as I do today. That $1,267,579 was with a Cost of Living Increase (COLA) of 7.2%.

 

Larry Cohen:Wow.

 

Josephine G. S.:Yeah. That’s the looming increase. It would have paid Christina in excess of $200 million-

 

Larry Cohen:Yeah, with that kind of a COLA it’s amazing.

 

Josephine G. S.:And today, of course we all know how devastating that was not to have done that. The attorney’s fees would have been based on the cost of the structure, not the gross amount received, so actually Larry 40% of $2.5 is double the attorney fees. I guess that was their answer.

 

Larry Cohen:Wow. Wow. Am I right in that you were never given the opportunity to understand what a structure was? It was never really explained to you, is that right?

 

Josephine G. S.:No, not at all.

 

Larry Cohen:Wow.

 

Anne Lawter:So Josephine as I understand it, after that experience of taking that settlement, there came a time that you and your family had exhausted your funds and yourself and you instituted a malpractice case against the attorneys and that guardian ad litem for legal malpractice, regarding the fact that Christina’s case should have never been settled for a lump sum and the consequences that followed. Can you tell us about that?

 

Josephine G. S.:Yes I can. It was for the longest time, because we knew something was wrong, not until I spoke with an attorney named Todd who is in Dallas … He told me that he had never heard of a brain-damaged baby case not being settled with a structured settlement. Again, I had told him, “What does that mean?” And he kindly gave me the phone number of a structured settlement broker that has now become my friend over the past 25 years and that’s Mr. Neil Johnson.

 

I can remember meeting with Neil in an Italian restaurant over in Dallas and over two hours he explained in detail what a structured settlement was and the benefit of a rated age and what that would have meant to the value of Christina’s settlement. Larry and Anne, I left that meeting in tears. I wasn’t angry, I was just saddened that someone could do something so unconscionable.

 

I had filed a cause of action [inaudible 00:11:50] because I was unable to find counsel that would represent Christina because everyone that I had spoken to was fearful of retribution with judges and other attorneys in the future. So the two-year statute of limitations was tolling so I filed a lawsuit.

 

The odd thing is Neil, he believed in us and researched and found one of the companies that actually has quoted a structured settlement in the underlying case. So I actually went to go and deposition John [Camp 00:12:26]. He was a defense attorney for the hospital. When I was asking him the question, “Was Christina ever offered a structured settlement?” And Larry and Anne, just sitting there and looking across at this attorney for the hospital … He just snapped his pencil in half like it was a twig and he looked me in the eye and said, “As I sit here today, I do not recall.”

 

I was just-

 

Larry Cohen:Yeah, sounds like he knew the bad news was coming. It’s interesting.

 

Josephine G. S.:Right, right.

 

Larry Cohen:You know Josephine, what’s resulted from your fight against your attorneys for doing what they did is given rise to what’s now commonly called the Grillo waiver. It’s a document that acknowledges in writing that the plaintiff understands the potential consequences of accepting a lump sum settlement in lieu of a portion of it being structured. I kind of think it’s akin to informed consent, where you really understand what you’re turning down if you want to turn it down, or what you’re getting if you decide to accept it. That seems so logical today but obviously wasn’t back there when you were in need of something like that. It’s through your situation that people in the future are not going to have to suffer through that circumstance like you did. At least something came out of that that hopefully will help others.

 

Josephine G. S.:And I sit here and I smile. I smile that her little life was for a reason and it was to help so many actually become better loved and taken care of by their families. Because, Larry and Anne, a family taking care of someone like Christina, it is so tolling on everyone. If the funds would have been there … You think about it, just momentarily, that life could have been different, but actually when you do think about it a little bit more it’s where it needed to be. Because if we had not have experienced that  we wouldn’t be here today and she would not have already started to help thousands of people.

 

Larry Cohen:Your story’s a humbling one, it really is, for all of us, to have gone through what you did and taking care of Christina for those many years. It’s as I say, a humbling story.

 

We’re going to take a quick break right now, and we’ll be right back in a minute right here on Ringler Radio with more with Josephine Grillo Sullivan. We’ll be right back.

 

Speaker 1:This is Ringler Radio, brought to you from Ringler, the nation’s leading provider of fair settlement solutions. Did you know that Ringler is involved in a third of all structured settlement cases in the country? Ringler advisors work with all the parties in a lawsuit settlement to find the best possible financial solution for the people involved. Everybody wins. There’s a Ringler consultant in all the major cities in the US. No one had more experienced experts in the settlement business than Ringler. Check out our website at www.ringlerassociates.com for the best information for injured parties, attorneys, and claims professionals to find the Ringler advisor nearest you.

 

When it’s your interest at stake in a lawsuit settlement, you want only the best, most objective financial plan. You can count on Ringler advisors to create customized plan that meets the financial needs of you and your family for the future. Visit ringlerassociates.com to learn more.

 

Larry Cohen:Welcome back to Ringler Radio. Glad you could join us. I’m joined today by my co-host Anne Lawter and our special guest, Josephine Grillo Sullivan, executive director the Christina Grillo Sullivan Foundation. Josephine, you and your family, your husband Craig and your son Christian, have devoted your lives to the memory of Christina in many ways. Of course one of them is the mission to influence legislation to encourage structured settlements. You even set a precedent with the second court of appeals case opinion holding guardian at litems accountable for breaching their fiduciary duty.

 

Talk to us a little bit about how you’re looking to change the law when it comes to structures versus lump sum payments when people have to make that pretty momentous decision.

 

Josephine G. S.:That process actually had been started by the passage of Senate Bill 731 in 1999. For three legislative sessions, that’s six years, we fought for that legislation that would make it mandatory for a structured settlement to be presented in writing when it involved a minor child or a non-competent adult. That was in a 76 Texas legislative session. It was passed and codified into Texas Section 139.001-5. Larry, I believe that probate courts truly, truly have too much power without accountability. I actually have proposed a five-member oversight panel when it comes to the health, safety, and wellbeing, consisting of a physician, a lawyer, two citizens, and legislative member because the abuse of the probate system has been well-documented and persons are being stripped over their rights with limited recourse.

 

Larry Cohen:Well I know who to nominate as one of the citizen members of that commission. (laughter) That’s for sure.

 

Josephine G. S.: 

 

Anne Lawter:That sounds like a great idea, Larry. Josephine, you had an opportunity to be right there with the legislature and give testimony. You and Christina both testified at the time that the law was being discussed. Can you tell us about that experience and how it affected you to be able to take Christina with you to talk to the legislators?

 

Josephine G. S.:I guess it was just one of the many times she was by my side, again for the six years we traveled back and forth to Austin and other hearings across the state of Texas. To describe it, she was instrumental in I think them actually listening and seeing because when you have someone that is severely brain-damaged, it actually … You’re creating an awareness. I don’t think people can really completely understand until they walk or see your shoes, just for a bit. So it was very important and the response was what was needed, when she was traveling with me.

 

Larry Cohen:Christina’s memory also takes shape, Josephine, in the form of your foundation’s work to support families with brain injured loved ones. I know we all want to hear about that, and also tell us about the Life Care Resource Guide. These are pretty inspirational things you’re doing.

 

Josephine G. S.:Well the Life Care Resource Guide actually takes into account the medical diagnosis of an individual. What we do as a foundation, because the stress of family helping to support that person … We actually help them because it’s so daunting. We have volunteer nurses, therapists, and they actually go in and look for the resources around their demographic area and that’s how we create their life care plan. The therapies, the equipment, do you need dealers, doctors, hospitals, day-habs? It’s just whatever is needed for that family to be able to take care of their loved ones.

 

Larry Cohen:That’s interesting, Josephine. That’s tremendous work you’re doing for the brain injured families. I’m sure they appreciate everything that your foundation and the Life Care Resource Guide can provide for them.

 

On your foundation’s website, there’s an interesting yellow butterfly which we’ve learned has some special significance, but I’m not sure what that is. So talk to us about Christina and the significance of the yellow butterfly. What is that?

 

Josephine G. S.:Well Larry, they say that our Heavenly Father allows our loved ones that have gone to heaven to come through the veil. It started after Nina had gone to heaven. From time to time when we would be at the point of such unbearable grief, a yellow butterfly would come and appear. I guess the first time was at a football game, oddly enough, ’cause Nina went everywhere with us. She loved to cheer on her brother’s college team and to encourage him because he was so devastated after losing her. He was about to graduate from college. So we went to the football game, trying to make it as normal as possible and went and even stood in the handicapped section where she used to stand, where we rolled her up in her wheelchair. And here comes this yellow butterfly, and I started crying.

 

I guess to me it was a symbol that maybe she was saying, “I’m okay. I’m here.” And it had landed on the railing where her wheelchair used to sit. There was a lady standing next to me and she hugged me and I explained to her. If you can imagine … Of course a football stadium’s all concrete. It’s not like there’s trees or anything around that a butterfly would show up. But there again, here comes another football game and here comes this yellow butterfly landing on the same spot. So to me it was more Christina saying, “You know Mom, I’m okay. I’ll always be here with you.” And it just to this today really means a lot.

 

Larry Cohen:Oh, no question. It gives you goosebumps, that story. It’s really amazing. And you know you hear stories like that, and I think it all comes down to having faith that things are a little bit better up there. I think that’s what she is telling you. That’s a very interesting and heartfelt story.

 

Josephine G. S.:I really would love to share with your listeners, the one day … Because there is an angel that the butterfly is in the wing of the logo … I was running on the beach one day … I’m a runner. And I just couldn’t bear to see Craig crying over the loss of Nina and when I got back in the car, just shut the door and was yelling at the top of my lungs. And it’s so out of nature for me to do that, but I guess grief took over. Asking her where she was … That day we were actually donating one of her wheelchairs. So we had gotten back in the car and drove back home and got the wheelchair out and was putting it in the car of a lady that actually has helped us for many years. She started crying and then I started crying uncontrollably, and then there goes Craig.

 

Then all of a sudden she says you know, “Look up.” And I would invite your listeners to go to the website. It was the shape of an angel cloud. There wasn’t another cloud in the sky. It was absolutely breathtakingly beautiful. There again, it was another sign that … “You know Mom, you’re on the right track. We’re doing okay, and keep going.”

 

Larry Cohen:It’s amazing stories.

 

Anne Lawter:Yes, Josephine. The perseverance that you and your family have shown in carrying on Christina’s legacy is amazing and the work that you’re doing to help other families that take care of brain injury victims is just amazing. Can you tell us how if someone wanted to get involved with the foundation and volunteer, how they could do that?

 

Josephine G. S.:I surely can. I just wanted to say one more thing in regards to her logo. Her loving brother Christian actually did those strokes of love on his tablet and created that logo. I wish I had more time to tell you about Christian, because what an amazing young man and what an amazing brother he was to her and still is.

 

Larry Cohen:Well you know they have an amazing mother too, don’t forget that.

 

Josephine G. S.:Thank you. And in regards to, Anne, thanking you for how people can assist Christina’s foundation, the foundation that bears her name and the foundation that has helped so many not only changing the structured settlement industry but allowing structured settlement brokers to assist so many. If you could please go to her website, because the foundation is helping so many families and we just need their support, and through donations. It’s www.tcgsf.org. Because we’re a 501(c)(3) public charity, anything that you donate can and will be tax exempt as allowed by law. I guess not only as the executive director but as a mom who loved and cared for her daughter for so many years, almost 33 incredibly blessed years, this is the way that you can honor Christina. Become a Nina moment, and please go to her foundation and donate.

 

if you want to talk to me personally, I would love that. You can dial the 1-866-637-8392, that’s extension 21. And my email address is Josephine@tcgsf.org and I would love to hear from you. Again, Anne and Larry, I cannot thank you enough for allowing me to be a part of Ringler Radio and I just-

 

Larry Cohen:It’s our pleasure, believe me. This has been an inspirational show. It’s not just educational but inspirational and I think all of our audience would respond positively to that statement. Anne I know is someone that’s been in this industry, and we all deal every day with these issues of, “Are they gonna take a structure or are they gonna take a cash settlement?” We’ve seen the pain that comes from those who don’t really have the decision explained properly to them. I think what you’ve done Josephine, not just through your foundation helping others, but also through the toughness and the fight, having to file the pro se litigation even, that just shows the spirit you’ve had. You really helped a lot of people. I just want you to know that.

 

Josephine G. S.:The appeal case, as well, it was just-

 

Larry Cohen:Oh yeah, oh yeah. No question about it.

 

Anne Lawter:Josephine, having practiced as an attorney for almost two decades, I just cannot commend you enough for having the courage to be able to take something on yourself and having the courage to move forward with that or striving to make a difference in others’ lives as you have. My heart just bursts with joy in knowing what a major contribution you and Christina have made.

 

Josephine G. S.:Thank you so much. I will tell you, last night we had our second practice for the adaptive tennis program that we just started with the Special Olympics. At the end, because those children are so intellectually and physically disabled, at the end when you’ve got the smiles and the success and their parents are cheering them on, even if it’s just to hit a ball one time with the tennis racket, it just enlightens your heart. At the end when they took the picture, and the reason I’m saying this, is I had gotten everyone in the stands. We all got together and it was like one, two, three, and then everyone said, “Nina!”

 

Larry Cohen:Oh wow.

 

Josephine G. S.:The picture was taken and it was absolutely beautiful. So I will end on that note-

 

Larry Cohen:No question, no question. That’s terrific. Terrific way to end it. And I just want to say again, Josephine, tremendous having you here and I’m glad you gave out all the information to how to reach you and the foundation. Anne, if someone wanted to reach you, how would they do that?

 

Anne Lawter:They can reach me in the Ringler office in Troy at 248-457-1212 or at alawter@ringlerassociates.com

 

Larry Cohen:Terrific. All of you out there, you can reach any Ringler associate. You can find them, you can even look at their pictures if you want, by going to the Ringler website, ringlerassociates.com. On that website you’re going to find tremendous amount of information, helpful information, the kind of explanatory information that we only hope that at one point back in the day that Josephine might have had.

 

Josephine, you’ve been an inspiration to us. If you want to hear any of the Ringler Radio shows, ringlerassociates.com, ringlerradio.com, legaltalknetwork.com, or an iTunes where you can download the show and listen at your leisure and hopefully be inspired by Josephine as we all were today.

 

So with that I want to say thank you Josephine for being a tremendous guest and inspiring all of us. And as I said before, humbling all of us too at the same time. Thank you very much for being here.

 

Josephine G. S.:Thank you both and many blessings to you both as well.

 

Larry Cohen:Thank you. And Anne, thanks for being a great co-host.

 

Anne Lawter:Yes, thank you Larry and thank you Josephine.

 

Larry Cohen:And for the rest of you out there, be inspired and go have a great day. Bye-bye.

 

Speaker 1:The views expressed by the participants of this program are their own and do not represent the views of, nor are they endorsed by, Legal Talk Network, its offices, directors, employee, agents, representatives, shareholders, and subsidiaries. None of the content should be considered legal advice. As always, consult a lawyer.

 

Thanks for listening to Ringler Radio, celebrating more than a decade of podcasting, and over two million listeners. Think of Ringler, the objective settlement advisors with more than 140 consultants in 60 cities nationwide. Visit ringlerassociates.com today.

 

 

Filed Under: Structured Settlements

Using Benefit Offsets to Reduce Work Comp Costs

November 15, 2017 by

Reducing costs in your workers’ compensation program includes understanding the concept of offsets against workers’ compensation benefits.  This is something that often does not occur.  When it does, however, the result is program paying benefits that otherwise should not be paid.  A review of your workers’ compensation program to identify and implement applicable offsets can result in immediate savings to your program.

 

 

Understanding the Concept of Benefit Offsets

 

The ability to offset workers’ compensation benefits against collateral sources has its origins in the belief that someone suffering a personal injury should not reap a windfall.  In many jurisdictions, these same offsets are available under a workers’ compensation act for indemnity benefits an employee may be receiving from a government program.  These benefits include:

 

  • Social Security Disability (SSDI) benefits;
  • Social Security Disability (SSDI)Reverse Offsets
  • Prior Injury offsets;
  • Retirement annuities from public employee organizations; and
  • Various pension benefits received from a labor union health and welfare funds.

 

 

Application of the Offset Process

 

Statute or case law often define allowable offsets.  In some jurisdictions, the law explicitly prohibits these offsets.  It is important to understand the law in your state before you seek to reduce the amount being paid in workers’ compensation indemnity benefits.

 

 

Social Security Disability Benefit Offsets

 

A seriously injured employee can collect both workers’ compensation benefits and Social Security Disability benefits (SSD) if the Social Security Disability requirements are met. To prevent employees from collecting excessive workers’ compensation benefits and SSD benefits, state laws define the maximum benefit wage the employee can receive. In most states, the amount of Social Security Disability is offset by the workers’ compensation indemnity paid.

 

Example: An injured employee is collecting permanent partial disability (PPD) at the rate of $300 per week, or $1,300 per month (four and one-third weeks). The employee applies for Social Security Disability (SSD) and is approved. Based on prior earnings, the employee is eligible to collect $1,500 per month from the Social Security Administration (SSA).

 

With the workers’ compensation offset, SSA pays the employee $200 per month ($1,500 SSD minus $1,300 PPD). When the employee’s PPD is exhausted, the SSD will revert back to $1,500/month.

 

 

Social Security Reverse Offsets

 

A few states have a reverse offset, allowing the workers’ compensation carrier to take a credit for the amount paid in SSD benefits. Be sure your adjuster knows if the state allows a reverse offset for workers’ compensation indemnity benefits paid to an employee who is also collecting SSD.

 

In the previous example, with a reverse offset, the carrier would pay no PPD, as the SSD is greater than the PPD.

 

Example – A reverse offset: An employee collects $1,300 a month in PPD and is approved for $1,000 per month in SSD. The employee is paid $300 per month ($1,300 minus $1,000) by the workers’ compensation carrier. When PPD is exhausted, the employee then collects a $1,000 in SSD per month.

 

 

Prior Injury Offsets

 

Another deduction sometimes overlooked is the pre-existing permanent partial disability rating the employee has from a prior injury, often at a different employer.

 

Example: The employee suffered a back injury fifteen years ago while working for another company. The back claim was settled with the prior workers’ compensation carrier, based on a 10% permanency rating.

 

A year ago, the same worker suffers a back injury while working for your company. The treating physician and the IME doctor both give the employee a 25% permanency rating, which includes the pre-existing condition.

 

Most states allow you to deduct the prior permanency. This allows the adjuster to settle the claim for the value of a 15% rating (25% minus the prior 10% rating).

 

 

Other Factors to Consider

 

There are various issues to consider when applying an offset against applicable benefits.  It is important to consider the rules and requirements when seeking to take advantage of this compensation structure.  Important considerations include:

 

  • Offsets are often only allowed to be taken for the actual amounts an employee or their dependents receive and not the amounts they may be entitled to receive. This situation is common when an employee voluntarily decides to receive a reduced collateral benefit.

 

  • Employers and insurers can often offset the amount the employee was receiving prior to the work injury. The rationale for this is rooted in the understanding an employee’s earning capacity changes following an injury.  This change in income impacts their collateral benefits.

 

  • Benefits can be recategorized in order to achieve the offset threshold amount. This often occurs when temporary total disability benefits are recategorized to permanent total disability benefits.  Most jurisdictions that allow this find it permissible to do this on a retroactive basis.

 

Conclusions

 

It is common for workers’ compensation programs to overlook collateral source offsets.  This is a costly error that can easily be corrected and result in immediate savings to many programs.

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO 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: https://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.

Filed Under: Structured Settlements

The Art – 7 Considerations When Using a Structured Settlement

November 6, 2017 by

They say the only certainties in life are death and taxes; but annuities can also be included on the short list. Among investments, annuities are one of the few that are virtually guaranteed.

 

That fact bodes well for injured workers concerned about their immediate and long-term financial needs. Well-designed structured settlements that are funded through annuities are tax-free, guaranteed, and incur no risk.

 

Workers’ compensation stakeholders who utilize them can ensure injured workers and their families are fully protected. The key is to find partners who have a deep understanding of these financial vehicles and the insight to identify the true needs of those affected.

 

 

When & Why Structured Settlement

 

Structured settlements are available to injured workers to settle their claims. They are an alternative to taking a set amount of cash in one lump sum.

 

While structured settlements have been around for decades, there are many misconceptions.  They may not be appropriate for every injured worker, they are certainly worth considering on every settlement case.

 

One reason injured workers may opt for a lump sum over a steady income stream is the belief they can get a better rate of return and end up with more money on their own. Unfortunately, there are ample studies showing that just isn’t true. The longer time goes on, the more people who have chosen a lump sum say they have less money than expected and not enough for living expenses. Along with the tax-free status is the time value of money. In the end, it adds up to being able to meet financial obligations long term with money paid out through a structured settlement.

 

Having the income stream from a structured settlement funded through an annuity — as most are — assures there are no associated taxes, which makes a significant difference compared to normal investments. To get the same net rate of return from a typical investment compared to a tax-free annuity would often require putting the money in a high-risk vehicle with a steady, high interest rate, something that is very difficult and rare.

 

One survey of 1,000 people presented them with a hypothetical scenario and asked whether they would prefer a lump sum payment or a structured settlement. The majority chose a single payment and cited financial independence, paying off a large loan, and flexibility as their reasons.

 

The fact is, changes in laws and regulations since the 1970s have made structured settlements very flexible, along with guaranteed elements. Structured settlements today come in all sorts of shapes and sizes, depending on a person’s needs. For example, many people, take a sizable amount of cash up front to pay medical bills and/or debts, then have the rest paid out in certain increments at over time. While the bases of structured settlements are the same, it’s important to understand current and future needs to get the right formula.

 

 

The Art – 7 Considerations When Using a Structured Settlement

 

Structured settlements need to be constructed differently for each injured worker, depending on his needs. There is no ‘cookie-cutter’ settlement. Each requires a basic life care plan with future needs and expenses included.

 

One or more annuities may be included in a structured settlement. These should be purchased from high-rated insurance companies to ensure financial strength.

 

Among the factors that may be included in are the following:

 

  1. Immediate expenses. Many structured settlements include upfront cash to cover such things as medical expenses, ongoing debts/loans, and attorneys’ fees.
  2. Monthly payouts. A typical structured settlement would also include a set amount per month for a specified number of years, and include a cost-of-living adjustment. For example, the amount could cover mortgage and other associated payments for 20 years.
  3. College education. If the injured worker has children, money would likely be included for college education. In addition to a monthly expenditure, a structured settlement could include, for example, an annual payment of $15,000 for a certain four-year period.
  4. Retirement funding. Some structured settlements also include a lump sum payment at the anticipated retirement year to supplement Social Security. Alternatively, a monthly amount on top of that previously established could kick in with retirement, to help pay for travel and purchases for grandchildren.
  5. Non-life contingent payments. Structured settlements can also allow for designated beneficiaries to continue receiving the future payments tax-free in the event of the injured worker’s premature death.
  6. Public Benefits. Even a small settlement can disqualify an injured worker from public benefit programs like Supplemental Security Income and Medicaid. A special needs trust funded with a structured settlement can help maintain eligibility and protect the employee’s long-term security.
  7. MSA. Medicare’s interests must be considered when someone settles past, present or future medical expenses to avoid jeopardizing these benefits or expose the injured worker to fines or penalties. In some cases, a Medicare Set-aside may be needed.

 

Summary

 

Injured workers and payers looking to close claims may find the best value for all sides through a structured settlement rather than a lump sum payment. When an experienced structured settlement expert is involved and the employee’s current and future needs are included, all stakeholders can see a win-win.

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO 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: https://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.

Filed Under: Structured Settlements

7 Ways Structured Settlements Are Advantageous — Regardless of Interest Rates

September 20, 2017 by

Interest rates continue to be at historically low levels. Even with recent hikes by the Federal Reserve, other factors playing into the equation are holding down rates. While that’s great for those buying property, it raises questions for injured workers setting up or dependent on a pre-established income stream — such as a structured settlement. The good news is, it really doesn’t matter.

 

Structured settlements are not investments like other products and, therefore, are not subject to the whims of Wall Street. They are guaranteed due to their underlying financial instrument – typically an annuity from a life insurance company. The structured annuity is guaranteed regardless of what happens in the market. As long as a highly rated insurance company is involved, there are strict regulations to ensure sufficient reserves are set aside for every annuity the company issues.

 

A deeper understanding of structured settlements sheds more light on how they work and why the interest rate environment is really not a factor.

 

 

What is a Structured Settlement

 

First created in Canada, structured settlements came into this country in the 1970s exclusively for injured workers. Initially they were used on large, catastrophic injury cases; although now as many as half of structured settlements are often less than $50,000. Federal and state governments have passed myriad laws and changes to the tax codes over the years to make structured settlements more attractive.

 

Instead of taking the money received from a workers’ compensation settlement or personal injury lawsuit in one lump sum, some or all the money is put into a structured settlement for future needs and goals. A set amount of the money is distributed at preset intervals — monthly, quarterly, annually or whatever is agreed upon by all parties. It can be doled out over a finite period of time or for the person’s entire lifetime. The settlement may even include a portion for beneficiaries upon the injured worker’s death.

 

A typical structured settlement includes upfront cash for immediate needs, such as attorney fees or medical expenses. The remainder is then put into one or more annuities issued by a life insurance company, which makes the periodic payments to the injured worker.

 

 

Advantages

 

Structured settlements include many inherent features that make them more appealing than lump sum settlements. Research continually shows that a majority of people who receive a single sum of money end up spending most or all of it too soon.

 

Among the additional benefits of structured settlements are:

 

  1. Guarantees.  The payments to the injured worker from interest-earning annuities are backed by insurance companies, which are highly regulated.
  2. Tax Free.  The injured worker receives a 100 percent lifetime exclusion from income, dividend and capital gains taxes.
  3. No Fees.  Structured settlements do not include management fees.
  4. No risk. Because of their structures and guarantees, the injured worker receives the money as scheduled — regardless of current interest rates. Also, they are not managed as other investment products are, so are not in danger of ending due to poor investment results.
  5. Eligibility. Benefits from federal and private health care plans are protected.
  6. Customization. Working with an experienced, reputable company with appropriate knowledge and financial tools means the settlement can be designed to fit the specific needs and desires of the injured worker involved.
  7. Higher returns. One of the biggest advantages of structured settlements stems from their status as tax free. That translates to returns that are higher than those seen in low- to moderate-risk investments. To match or get a better return than what an underlying annuity provides would require taking on higher risk and more uncertainty.

 

For example, in order for an injured party to earn the 6 percent return rate of the structured settlement, he would have to earn an additional 3.23 percent on the cash investment at the 35 percent tax bracket (9.23 percent less 6.0 percent), an additional 2.33 percent at the 28 percent bracket and 2.0 percent more in the 25 percent income tax bracket. In addition to the added interest, the self-investor would have to subtract any local and state taxes, as well as the related brokerage or investment fees.

 

 

Conclusion

 

Getting long term workers’ compensation claims off the books and ensuring the injured worker’s needs are taken care of can be done relatively easily through a structured settlement. Those with the appropriate expertise in developing them create a win-win for all parties involved in the settlement.

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO 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: https://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.

Filed Under: Structured Settlements

How To Settle Tough Workers’ Comp Cases Without Unintended Consequences

August 1, 2017 by

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: https://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.

Filed Under: Structured Settlements
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