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Lump-sum injury settlements facilitate return to work

When a Colorado employee is injured, he or she may apply for benefits that cover his or her medical bills and other expenses. For some time, it has been a topic of debate as to whether lump sum injury settlements in workers' compensation expedite or hinder the process of getting back to work after an injury. Some claim that receiving a large sum of money can have a delaying effect because employees feel provided for and attaining income is less urgent.

Others say the settlements make a Denver employee feel as if the matter is solved. The closure a lump-sum provides allows the injured employee to re-enter the workforce without stress.

Recently, the Workers Compensation Research Institute released its findings that shed some light on the issue. After observing over 2,000 workers who were injured in 2004 and then tracking their employment status through 2008, researchers found that large, lump-sum settlements tend to have a motivational effect. Recipients of such settlements were more likely to return to work than they were to leave it. Some exceptions were older workers who may have used settlement money towards retirement.

The Institute believes that these findings will have important policy implications because they help clarify the issue of how lump-sum settlements affect employee behavior. The goal is to achieve resolution on workers' compensation claims and, when possible, help injured employees get back to work as soon as they are able. Although all of the workers in the study were from a different state, the Institute believes the findings are universally applicable. Lump-sum settlements seem to be helpful in providing injured workers with closure and enabling them to move forward with their lives.

Source: Business Insurance, "Lump-sum settlement encourage injured employees to return to work: WCRI," Roberto Ceniceros, July 11, 2012

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