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Indemnity Only Settlement – Good Idea In Some Cases


Indemnity Only Settlement – Now More Popular

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.

Graphic Of Stethoscope Indemnity Only Settlement And Money

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.

Related: Workers Comp Indemnity Reserves Basic Definition

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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


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