Understanding workers’ compensation settlements: How they work for employers

Every settlement is unique, but they generally cover:

• Medical expenses related to the workplace injury

• Lost wages or disability benefits

• Future medical care costs, if applicable

• Attorney fees or legal costs

Settlements may be paid as a lump sum or through structured payments over time, depending on the agreement and state regulations.

Each state has its own process for approving and finalizing workers’ compensation settlements, but the general steps are similar across most jurisdictions:

• Claim evaluation: The insurance carrier reviews the medical details, claim history, and potential future costs of the injury.

• Settlement negotiation: The insurer, employee (and often their attorney), and sometimes the employer discuss the terms of a potential settlement.

• Agreement drafting: Once all parties agree, the terms are documented in a settlement agreement outlining the amount and conditions.

• State approval: Many states require a workers’ compensation board or judge to review and approve the settlement to help ensure it’s fair to the employee.

• Payment and closure: Once approved, payment is issued, and the claim is officially closed or limited according to the agreement.

In some situations, settlements may not be appropriate, particularly if the employee’s medical recovery is ongoing or if future costs are uncertain.

Employers play a critical role in helping the settlement process move smoothly and fairly. While your insurance carrier manages most of the negotiation, employers can support successful outcomes by:

• Providing accurate documentation: Share timely, complete injury reports and claim details.

• Staying engaged throughout the process: Maintain communication with your insurance carrier and stay informed about settlement discussions.

• Supporting return-to-work programs: Demonstrating commitment to employee recovery can help resolve claims more effectively.

• Working closely with your insurer: At Sentry, we keep you informed every step of the way, providing transparency and guidance throughout the claims and settlement process.

Taking a proactive approach helps protect your business and your employees.

At Sentry, our in-house claims team has decades of experience helping employers navigate complex workers’ compensation cases and settlements. We’ll work closely with you to help ensure the process is fair, compliant, and aligned with your company’s goals.