Top 10 Workers' Comp Settlement MISTAKES!

We're going to look at the most common mistakes injured workers make when settling their workers’ comp cases—and how you can avoid them. Whether you’re thinking about settling soon or just want to be prepared, knowing what not to do can make all the difference.

Mistake #1: Taking the First Offer Too Soon

That first settlement offer might seem like a quick win, but it’s almost always too low. Insurance companies know what your case is worth—and they hope you don’t.

Here’s what they’re not telling you:

• Once you settle, you’re stuck. If your injury worsens, you can’t ask for more.
• Hidden costs add up. Attorney fees, medical bills, and future treatment come out of your pocket.
• You can probably get more. With the right negotiations, most workers walk away with a better deal

Mistake #2: Thinking the Insurance Company Is on Your Side

Insurance companies want you to trust them—that’s how they get away with paying you less. The adjuster sounds friendly, a nurse case manager checks in on your treatment, and they say they’re “here to help.” But their real job? Saving the insurance company money.

Here’s how they do it:

• They act like they’re looking out for you. The friendlier they seem, the more likely you are to go along with their offers without questioning them.
• They send in nurse case managers. These nurses don’t work for you—they work for the insurance company and look for ways to limit or deny your treatment.
• They make lowball offers sound “fair.” They’ll tell you, “This is the best you’ll get,” hoping you take it without pushing back.

Mistake #3: Not Negotiating

Too many injured workers take the first offer without pushing back—which is exactly what the insurance company wants. If they’re offering you money, it’s because they know they owe you—but that first offer? It’s just their starting point, not their best deal.

Where people go wrong:

• They assume the offer is fair. It’s not. It’s just the lowest number they think you’ll take.
• They don’t realize what they’re giving up. Once you settle, you’re likely saying goodbye to future medical care and lost wage benefits.
• They don’t think they can negotiate. But you can—insurance companies expect some back and forth.

Mistake #4: Not Knowing the Different Types of Settlements

Not all workers’ comp settlements work the same way, but a lot of people don’t realize that. They hear “settlement” and assume it’s just a lump sum payout. It’s not. The type of settlement you choose can impact your medical benefits and future options.

Here’s the breakdown:

• Stipulated Agreement – Keeps parts of your case open. If your condition worsens, you may be able to reopen your case and get more benefits.
• Section 32 Settlement – Once you take the money, the case is closed—forever. Even if you need more treatment later, you’re on your own.
• Indemnity-Only Settlement – You get a lump sum for lost wages but keep your medical benefits open. Good option if you still need treatment.

The big mistake? Signing off without fully understanding the consequences. If you close your case completely and later need surgery, guess who’s paying for it? You.

Before agreeing to anything, make sure you know what you’re signing. The right settlement can protect you—the wrong one can leave you in a tough spot.

Mistake #5: Miscalculating What Your Settlement Is Really Worth

A fair settlement isn’t just about getting a lump sum—it has to cover your future, too. Before you settle, ask yourself:

• Will it cover future medical costs? If you’ll need more treatment, medication, or surgery, who’s paying for it?
• Does it account for lost wages? If your injury affects your ability to work long-term, you need compensation for that.
• Is your disability rating factored in? Your level of permanent disability directly impacts your payout.
• What about attorney fees and deductions? The final check you get isn’t always as big as it looks.

Some workers overestimate their claim, asking for unrealistic amounts based on personal debts. Others settle for way too little because they don’t realize everything they’re entitled to.

Mistake #6: Blowing Through Your Settlement Money

Getting a lump sum settlement feels like a fresh start, but if you’re not careful, that money can disappear fast. Too many injured workers spend it too quickly and end up stuck later—especially if they still need medical care.

Common slip-ups include:

• Spending too fast. A new car, a vacation, or paying off debt might seem smart, but if you don’t budget, you could run out before covering medical costs.
• Not setting aside money for treatment. If you gave up medical benefits in your settlement, you’re on the hook for future care.
• Ignoring Medicare rules. If Medicare is involved, you have to spend medical funds correctly or risk losing coverage when you need it most.

The best move? Talk to a financial planner before making any big decisions. A workers’ comp settlement isn’t just a payday—it’s supposed to last.

Mistake #7: Expecting a Huge Payout

A lot of injured workers go into settlement talks thinking they’re about to get a big check—only to be disappointed when the offer isn’t what they imagined. That’s because workers’ comp isn’t like a personal injury lawsuit.

Here’s what most people don’t realize:

• No pain and suffering payouts. It doesn’t matter how much your injury has affected your life—workers’ comp only covers lost wages and medical bills.
• You won’t get your full paycheck. At most, workers’ comp pays two-thirds of your average weekly wage, and that’s before deductions.
• Settlements follow a formula. The amount is based on your disability rating, not how much money you need to stay afloat.

Mistake #8: Settling at the Wrong Time

Settle too soon, and you might sell yourself short. Wait too long, and you could lose leverage.

Here’s where people go wrong:

• Settling before reaching Maximum Medical Improvement (MMI). If you haven’t fully healed, your condition could still change. Once you settle, there’s no going back.
• Not factoring in future medical costs. If you need ongoing treatment, make sure your settlement covers it—otherwise, it’s coming out of your pocket.
• Waiting too long. Dragging things out can sometimes hurt your case. Insurance companies love delays because they can argue your injury isn’t as serious as you say.

Mistake #9: Ignoring Medicare’s Rules

If your workers’ comp settlement includes money for future medical care, you can’t just spend it however you want—especially if you’re on (or will be on) Medicare.

Medicare requires some workers to set aside part of their settlement in a Medicare Set-Aside (MSA) account to cover future treatment. If you don’t follow their rules, Medicare could refuse to pay for your care later.

Here’s where people mess up:

• Spending medical money on other things. If it’s meant for treatment, don’t use it for bills, vacations, or anything else.
• Overpaying for care. Medicare has strict pricing rules—pay too much, and they might deny coverage later.
• Not keeping track of expenses. You need records showing you spent the money the right way—or Medicare could claim you misused it.

Mistake #10: Settling Without a Lawyer

Trying to settle your workers’ comp case without a lawyer is like playing poker without knowing the rules—and guess what? The insurance company isn’t going to help you out.

Here’s why going solo is a bad idea:

• You don’t know what your case is really worth. Insurance companies have experts figuring out how to pay you as little as possible. Without experience, it’s easy to take a lowball offer.
• You could lose future benefits. Once you settle, there’s no going back. If your condition gets worse, you’re stuck paying for treatment yourself.
• Insurance companies don’t play fair. They stall, delay, and use legal jargon to make you think their offer is the best you’ll get. A lawyer knows how to push back and get you more.

Yes, hiring a lawyer means paying legal fees, but in most cases, you’ll end up with way more than you would on your own. The insurance company has experts protecting their money—you need someone protecting yours.

Contact Us for Help With Your Workers' Compensation Case

If you’re dealing with a workers’ comp settlement—or just trying to understand your options—let’s talk. I’ve helped plenty of injured workers get the benefits and payouts they actually deserve, not just what the insurance company hopes they’ll take. Give me, Rex Zachofsky, a call at 212-406-8989, and let’s make sure you’re set up for the best possible outcome.