Let’s say you’ve been injured at work and your lawyer has secured an injury settlement of $100,000. It’s great that you’ve ended up with a six-figure settlement, but you’re not going to see the full amount deposited into the bank account. That’s because there are some fees and costs associated with your claim that you may be responsible for settling up. Below, we share five costs and fees that you may have to pay after you’ve received your settlement.
Fees and Costs Associated With Workers Compensation Cases
There is no guarantee that you’ll have to pay any or all of these fees, but we just want to bring them to your attention so there are no surprises.
1. Your Lawyer – First, if you earned a compensation package with the help of a lawyer, you’re going to have to pay him or her. Under Minnesota law, work comp lawyers are entitled to 20 percent of your first $130,000, with a maximum of $26,000 per injury. Using the $100,000 example, you would owe your lawyer $20,000. This probably seems like a lot, but studies have shown that work comp lawyers oftentimes pay for themselves many times over. If you accepted a lowball offer of $50,000 on your own because it sounded fair, you’d be missing out on $30,000 more in net gains because you didn’t hire an attorney. 20 percent may seem high, but, especially in serious or complicated cases, they often pay for themselves many times over.
2. Medical Bills – When you’re going through your workers’ compensation case, you’re likely collecting bills related to your expense. Your lawyer uses those bills and any potential future expenses to come up with a settlement offer. Your settlement agreement has these expenses factored in, so any unpaid medical bills will be taken from your settlement award.
3. Permanent Disability Advances – In some cases, the insurance companies will pay permanent disability payments prior to a final settlement agreement to help the worker with an immediate expense or need. If the insurance company agrees to advance your permanent disability payments, that total will be withheld from your final settlement or at least accounted for when coming up with a final award total.
4. Medicare – Medicare-eligible workers, or those who will be eligible in the future, may need to set aside a portion of their settlement to cover future medical expenses that would otherwise be paid by Medicare. Medicare operates as a secondary payer, and since another insurance company is responsible for footing the bill, Medicare won’t pay for future work comp-related expenses. Your lawyer will help you figure out any potential Medicare set-aside, but it’s worth noting that if the funds run out, Medicare will pay for additional work comp-related medical bills.
5. Taxes – As we explained on our blog, your workers’ compensation benefits are not subject to federal or state taxes, so you won’t have to pay in big with income taxes. However, if you receive interest as part of your total settlement, that interest is considered taxable income, so keep that in mind come tax time.
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