The Indemnity Only Settlement is when the Workers Comp adjusters settle the compensation payments part of the claim. The medical part of the claims is left open for the employee’s lifetime.
With the CMS’s Medicare Set-asides (MSA) becoming so prevalent, Indemnity Only Settlements are now becoming more popular than ever. I think it is a very bad risk transfer technique. I may be old school, but I do not see the reason in most jurisdictions to settle the indemnity and leave the medical part of a Workers Comp claim open forever. A proper MSA analysis submitted to the CMS would likely increase the settlement somewhat, but that would be better than just leaving open the most expensive part of any Workers Comp claim.
Whenever I mention this in presentations or conversations, I have been told that it is a good way to close out part of the claim. Why pay to close a part of the claim that becomes less of a risk upon a return to work? There are some states that will not allow an indemnity only settlement.
I had been recently informed by a Risk Manager for one of the largest public entities in the US that annuity settlements will preserve the requirements of the CMS/MSA. I will cover that in the next few posts.
Can you choose to settle if you wanted to?