A workers’ compensation settlment can be one of the most important financial decisions an injured worker makes. In New York, many claims are resolved through a Section 32 Waiver Agreement, which allows the worker and insurance carrier to settle some or all future workers’ compensation benefits in exchange for an agreed payment.

Depending on the terms of the agreement, a Section 32 settlement may close future wage-loss benefits, medical benefits, or both. The settlement may be paid as a lump sum, through an annuity, or under another agreed payment structure. Once the agreement is approved and becomes final, the benefits that were settled generally cannot be reopened later simply because the worker’s condition worsens or expenses increase.

For some injured workers, a lump-sum settlement offers financial flexibility and closure. For others, keeping benefits open may provide more security. Understanding what you are giving up—and what remains available—is essential before accepting a settlement.

Key Takeaways: Evaluating a Section 32 Agreement in New York

• Finality matters: A Section 32 Waiver Agreement generally permanently closes the portions of a workers’ compensation claim included in the settlement.
• Medical benefits can remain open: A worker may settle future wage-loss benefits while keeping medical benefits open, depending on the agreement.
• Future medical costs require careful planning: If medical benefits are settled, the worker becomes responsible for paying for future injury-related treatment.
• Board approval is required: Every Section 32 agreement must be reviewed and approved by the New York State Workers’ Compensation Board before it becomes final.
• Other benefits may be affected: A workers’ compensation settlement can affect the calculation of Social Security Disability Insurance benefits and may require additional planning when Medicare is involved.

What Is a Lump-Sum Workers’ Comp Settlement in New York?

In New York, a negotiated workers’ compensation settlement is commonly completed through a Section 32 Waiver Agreement.

A Section 32 agreement allows an injured worker and the insurance carrier to resolve some or all future benefits instead of continuing the claim under the normal workers’ compensation system.

A settlement may address:

• Future wage-loss or indemnity benefits
• Future medical benefits related to the work injury
• Both wage-loss and medical benefits

The parties may also agree to settle only certain parts of the claim. For example, a worker may close future wage-loss benefits while leaving medical benefits open.

Once the applicable withdrawal period has expired and the Workers’ Compensation Board approves the agreement, the settlement becomes final and binding as to the benefits covered by it.

The Board reviews every Section 32 agreement before approval. Some agreements may be approved based on written documentation, while others may require a hearing depending on the terms and circumstances.

What Are the Pros of Accepting a Lump-Sum Workers’ Comp Settlement?

For some injured workers, settling a workers’ compensation claim can offer greater financial control and reduce the uncertainty that comes with keeping a claim open.

One potential advantage is access to a significant amount of money sooner rather than receiving benefits over time. Depending on the worker’s needs, those funds may be used to pay debt, cover living expenses, pursue job training, make housing changes, or address other financial priorities.

A settlement may also reduce ongoing involvement with the workers’ compensation system. If wage-loss benefits are settled, the worker no longer has to rely on continued weekly payments from the carrier.

If medical benefits are also settled, the workers’ compensation carrier generally no longer controls authorization for future treatment. However, the worker also becomes responsible for arranging and paying for injury-related care, subject to the rules of any other health insurance or benefit program that may apply.

Some workers also value the certainty that comes with resolving a long-running claim. A finalized settlement can eliminate future disputes over the benefits included in the agreement.

What Are the Cons of Accepting a Lump-Sum Settlement?

The biggest disadvantage of a Section 32 settlement is that the benefits being settled are generally closed permanently.

If a worker settles future medical benefits and later needs additional surgery, therapy, medication, or specialist care, the workers’ compensation carrier will generally no longer be responsible for those costs.

Future medical needs can also be difficult to predict. A condition that appears stable at the time of settlement may worsen later, or an unexpected complication may require expensive treatment.

There is also a financial-management risk. A lump-sum payment may need to replace benefits that otherwise could have been paid over many years. Spending the settlement too quickly can leave an injured worker without the financial support that ongoing benefits might have provided.

Settlements may also interact with other benefit programs. Depending on how the agreement is structured, a workers’ compensation settlement may affect Social Security Disability Insurance calculations or require special consideration of Medicare’s interests.

How Can a Lump-Sum Settlement Affect Future Medical Care?

Settling medical benefits changes who is financially responsible for future treatment related to the work injury.

When medical benefits remain open, the workers’ compensation carrier generally remains responsible for authorized, causally related treatment under New York workers’ compensation rules.

If medical benefits are closed through a Section 32 agreement, that responsibility generally shifts to the injured worker.

That means the worker may need to use settlement funds to pay for future:

• Doctor visits
• Surgery
• Physical or occupational therapy
• Prescription medications
• Diagnostic testing
• Medical equipment
• Other injury-related treatment

Before settling medical benefits, it is important to consider not only current treatment but also what care may be needed years in the future.

Private health insurance or Medicare may not automatically take over costs that should have been addressed through the workers’ compensation settlement. Coverage depends on the rules of the applicable insurance or benefit program.

What Should You Know About Medicare and a Workers’ Comp Settlement?

Medicare requires special consideration when a workers’ compensation settlement includes future medical expenses.

Workers’ compensation is generally responsible for medical treatment related to a covered work injury before Medicare. Because of that, Medicare’s interests may need to be protected when future workers’ compensation medical benefits are being closed.

In some cases, this may involve a Workers’ Compensation Medicare Set-Aside arrangement, commonly called a WCMSA. An MSA sets aside part of the settlement for future injury-related medical expenses that Medicare would otherwise cover.

However, an MSA is not automatically required in every workers’ compensation settlement.

Whether one is appropriate depends on factors such as Medicare status, anticipated future eligibility, the value of the settlement, and projected medical expenses.

Workers who are already receiving Medicare or may become eligible in the near future should pay particular attention to this issue before agreeing to close medical benefits.

Comparing Workers’ Compensation Benefit and Resolution Options in New York

New York workers’ compensation claims can result in different types of payments depending on the worker’s condition and the status of the claim.

Ongoing Benefits

An injured worker may continue receiving weekly wage-loss benefits while eligible, while the insurance carrier continues paying for authorized medical care related to the work injury.

The claim remains open and benefits continue according to the applicable workers’ compensation rules.

Schedule Loss of Use Award

A Schedule Loss of Use, or SLU, award compensates a worker for permanent loss of function involving certain body parts, such as an arm, leg, hand, foot, finger, toe, vision, or hearing.

An SLU is a statutory award rather than a negotiated Section 32 settlement.

Depending on the circumstances, the remaining award may be paid through continuing payments or as a lump sum. Medical benefits related to the injury may remain open.

Section 32 Waiver Agreement

A Section 32 settlement is negotiated between the worker and the insurance carrier.

It may resolve:

• Wage-loss benefits only
• Medical benefits only
• Both wage-loss and medical benefits

Payment may be made as a lump sum, through an annuity, or under another negotiated structure.

Only the portions of the claim included in the agreement are permanently settled. Other benefits may remain open if the agreement specifically preserves them.

How Is the Value of a New York Workers’ Comp Settlement Calculated?

There is no single formula for calculating the value of a Section 32 settlement in New York.

The amount is negotiated between the injured worker and the insurance carrier and may depend on several factors, including:

• The worker’s compensation rate
• The type and degree of disability
• How long future wage-loss benefits might otherwise continue
• Medical prognosis
• Expected future treatment
• Whether additional surgery may be necessary
• Prescription and rehabilitation costs
• Disputed issues in the claim
• Prior payments or awards
• Whether wage-loss benefits, medical benefits, or both are being settled

Future benefits are also being exchanged for money paid sooner, which can affect how the parties evaluate the value of the settlement.

Estimating future medical needs may involve reviewing medical opinions, recommended treatment, medication costs, and the likelihood of future procedures.

In more complex cases, additional medical, vocational, or financial analysis may be useful.

Because a Section 32 agreement may replace years of future benefits, any settlement offer should be evaluated carefully against expected wage-loss benefits, future medical needs, and the risks of keeping the claim open.

What Questions Should You Ask Before Accepting a Workers’ Comp Settlement?

Before agreeing to a Section 32 settlement, an injured worker should understand exactly which benefits will be closed and which, if any, will remain open.

Important questions may include:

• Does the settlement close wage-loss benefits, medical benefits, or both?
• What treatment is likely to be needed in the future?
• Could another surgery become necessary?
• How much might future prescriptions, therapy, or specialist care cost?
• How long could weekly workers’ compensation benefits otherwise continue?
• Will the settlement affect Social Security Disability Insurance?
• Does Medicare need to be considered?
• Are there any liens or reimbursement obligations?
• Is there a third-party personal injury claim connected to the accident?
• How will the settlement funds be managed over time?

It may also be important to understand whether the medical condition has stabilized.

A worker does not necessarily have to reach maximum medical improvement before entering a Section 32 agreement. However, when the prognosis is still uncertain or additional treatment may be needed, estimating future costs can be more difficult.

How Can a Section 32 Settlement Affect a Third-Party Personal Injury Claim?

Some workplace injuries also create a separate personal injury claim against someone other than the employer.

For example, a construction worker injured by defective equipment, a delivery driver hit by another motorist, or an employee injured because of a dangerous property condition may potentially have a third-party claim in addition to workers’ compensation benefits.

A workers’ compensation settlement and a third-party personal injury claim can affect one another.

The workers’ compensation carrier may have reimbursement or lien rights involving money recovered from a third party, and approval may be required before resolving certain third-party claims.

For that reason, workers with both a workers’ compensation claim and a related personal injury case should consider how the two matters interact before finalizing either settlement.

When Might Keeping Benefits Open Make More Sense?

A Section 32 settlement is not necessarily the best option for every injured worker.

Keeping benefits open may make more sense when future medical needs are significant or uncertain.

For example, someone who expects additional surgery or long-term treatment may prefer to keep medical benefits open so the workers’ compensation carrier remains responsible for authorized, injury-related care.

Ongoing wage-loss benefits may also provide more predictable income for someone with a serious long-term disability.

The duration of those benefits depends on the worker’s disability classification and continued eligibility. Some permanent partial disability benefits are subject to statutory duration limits, while other classifications operate differently.

For workers concerned about managing a large settlement over many years, continued benefits may offer greater financial stability than a single payment.

Frequently Asked Questions About New York Section 32 Settlements

How Long Does a Section 32 Settlement Take to Be Approved?

The timeline varies depending on the agreement and whether the Workers’ Compensation Board requires additional information or a hearing.

Every Section 32 agreement must be reviewed and approved by the Board, but a formal hearing is not required in every case.

The parties generally have a 10-calendar-day period during which the agreement may be withdrawn after it is deemed submitted. Once the agreement becomes final, the insurer generally must send the settlement payment within the applicable payment period.

Because processing times vary, some settlements may be completed within several weeks, while others take longer.

Can You Reopen a Settled Workers’ Comp Case in New York?

The portions of a workers’ compensation claim resolved through a final Section 32 Waiver Agreement generally cannot be reopened for additional benefits simply because the worker’s condition later worsens or expenses increase.

That finality is one of the most important factors to consider before settling.

The Workers’ Compensation Board recognizes that a finalized agreement may be modified if all parties agree, but an injured worker generally cannot unilaterally reopen benefits that were permanently settled.

Any portion of the claim that was specifically left open under the agreement may continue to be handled through the workers’ compensation system.

Are Workers’ Compensation Settlements Taxable in New York?

Workers’ compensation benefits and settlements paid under workers’ compensation laws for a work-related injury or illness are generally excluded from federal taxable income.

However, tax issues can become more complicated when a settlement involves other types of payments, Social Security benefits, interest, or related claims.

Workers with questions about the tax consequences of a particular settlement should consider speaking with a qualified tax professional.

Can You Settle Wage-Loss Benefits and Keep Medical Benefits Open?

Yes. A Section 32 agreement can be structured to settle only certain parts of a workers’ compensation claim.

For example, an injured worker may agree to settle future wage-loss benefits while keeping medical benefits open.

Whether that arrangement is available depends on the terms negotiated with the insurance carrier and approved by the Workers’ Compensation Board.

This type of partial settlement may appeal to workers who want financial certainty regarding wage-loss benefits but still expect significant future medical treatment.

Need Legal Help? Brandon J. Broderick, Attorney at Law, Is Here for You

Deciding whether to accept a Section 32 workers’ compensation settlement requires looking beyond the amount being offered. You need to understand what benefits you are giving up, what future medical care may cost, how long other benefits might continue, and whether the settlement could affect programs such as Social Security Disability Insurance or Medicare.

At Brandon J. Broderick, Attorney at Law, our workers’ compensation attorneys help injured workers understand their options before making decisions that may permanently affect their benefits.

Our team is available 24/7 to discuss your case, review your workers’ compensation claim, and explain how a proposed settlement may affect your future. Contact us today for a free, no-obligation consultation.