Workers’ Comp Settlements in Virginia: Lump Sum vs. Keeping Your Medical Benefits Open

At some point in your Virginia workers’ comp claim, the insurance company (or your own attorney) is going to raise the idea of a settlement. That single word covers more ground than most injured workers realize. Do you take one final check and walk away for good, or do you take a payout for your lost wages while keeping your medical benefits open for future treatment?

A workers’ comp settlement in Virginia is not one-size-fits-all, and the choice you make is permanent. This guide breaks down your real options, walks through how to think about the decision, and explains what the Virginia Workers’ Compensation Commission actually requires before any settlement becomes final.

At a Glance

What Are the Main Types of Workers’ Comp Settlements in Virginia?

Virginia insurers and injured workers generally negotiate around four settlement structures. Each one trades away a different piece of your claim, so it’s worth understanding what you’re actually giving up before you sign anything.

• Full and final (lump sum) settlement. This closes your entire claim in exchange for a single payment. You give up your right to future wage-loss benefits and future medical treatment related to the injury. It’s the most common type of settlement in Virginia and the one that ends your relationship with the insurance company completely.
• Wage-loss-only settlement (often called “lump sum with open medical”). You accept a lump sum to close out your wage-loss claim, but your lifetime medical award stays in place. The insurance carrier remains responsible for treatment related to your injury going forward.
• Structured settlement. Similar to a full and final settlement in that it closes your entire claim, but instead of one payment, the money is paid out over time in scheduled installments.
• Full and final settlement with a Medicare Set-Aside (WCMSA). A variation on the full and final settlement used when Medicare’s interests need to be protected, discussed in more detail below.

Renfro & Renfro breaks these categories down further, including medical-only settlements where the wage-loss claim stays open instead of the medical claim. Which structure makes sense depends heavily on where you are in your recovery and what your future treatment is likely to look like.

Lump Sum vs. Keeping Medical Benefits Open: Side-by-Side

The decision most injured workers are actually wrestling with isn’t a four-way choice. It’s this: close everything now for maximum certainty, or close only the wage-loss piece and keep medical coverage available. Here’s how the two compare directly.

Keeping medical open isn’t a blank check, though. The carrier can still require pre-authorization, dispute a specific treatment, or push back on a referral, the same way it could before you settled. What changes is that the obligation to pay for injury-related care doesn’t go away just because your wage-loss claim did.

How Do I Decide Which Settlement Is Right for Me?

There’s no formula that spits out the right answer, but a handful of honest questions can narrow the decision considerably before you ever sit down with an attorney.

1. Have I reached Maximum Medical Improvement (MMI), or could my condition still change? If your doctor hasn’t said your condition has plateaued, locking in a settlement early can mean guessing at future costs instead of knowing them.
2. Am I likely to need surgery, injections, or ongoing treatment down the road? An injury that’s likely to require future procedures is a strong argument for keeping medical open.
3. Do I have other health insurance I could fall back on if I close my medical benefits? If not, closing medical coverage shifts real financial risk onto you.
4. Am I on Medicare, or will I be within the next couple of years? This changes how your settlement has to be structured and may require a Medicare Set-Aside.
5. Do I need the full value of my case now for a specific reason? A full and final settlement puts more money in your hands today, since it isn’t split across two negotiations.
6. How confident am I managing a lump sum responsibly over years, not months? This is a practical, not a legal, question, but it matters just as much.

These questions are a starting point for the conversation, not a substitute for it. The right answer depends on your specific injury, your treatment history, and how the insurance company has behaved so far in your case, which is exactly the kind of case-by-case judgment an experienced workers’ compensation attorney applies before recommending either path.

What Is a Medicare Set-Aside (WCMSA) and When Does It Apply?

A Workers’ Compensation Medicare Set-Aside is a portion of a settlement specifically earmarked for your future medical care related to the injury. The funds have to be spent down on injury-related treatment before Medicare will step in and pay for anything connected to that injury. It exists because federal law treats Medicare as a “secondary payer,” meaning workers’ comp is supposed to pay first for a work injury, not Medicare.

According to the Centers for Medicare & Medicaid Services (CMS), a WCMSA proposal typically needs to be submitted for review when:

• You’re already a Medicare beneficiary and the total settlement is greater than $25,000, or
• You have a reasonable expectation of enrolling in Medicare within 30 months of the settlement, and the anticipated settlement value for future medical and wage-loss benefits is greater than $250,000

If neither threshold applies to your case, a formal WCMSA review usually isn’t required, though your settlement may still need to account for Medicare’s interests in some form. A WCMSA is worth understanding even if you’re not close to Medicare eligibility yet, because it shows how Virginia settlements can blend elements of both paths. A full and final settlement with a WCMSA still closes your case completely, but it sets aside dedicated money for the medical costs a wage-loss-only settlement would have kept the carrier directly responsible for.

How Does the Virginia Workers’ Compensation Commission Approve a Settlement?

No settlement is final just because you and the insurance company agree on a number. Every workers’ comp settlement in Virginia, whether it’s full and final or wage-loss-only, has to be reviewed and approved by the Virginia Workers Compensation Commission before any money changes hands. A Deputy Commissioner has to find that the deal is genuinely in your best interest, not just that both sides signed off on it.

The process generally moves through these stages:

1. Negotiation. Your attorney and the insurance company go back and forth until you reach a number both sides accept.
2. Petition and Order filed. Once terms are agreed, the settlement is drafted and submitted to the Commission for review, including supporting documentation like medical records and an affidavit from the injured worker.
3. Deputy Commissioner review. The Commission checks that the paperwork is complete and that the settlement serves your best interest, not just the insurer’s bottom line.
4. Approval. Commission review of a properly documented settlement typically takes about two weeks.
5. Payment. Once approved, the insurance company has up to 44 days to mail your settlement check.

Attorney’s fees are part of this review too. Virginia caps contingent attorney’s fees in workers’ comp cases at 20 percent of the settlement or award, and the Commission has to approve that fee as part of the settlement, regardless of what your fee agreement says.

A Realistic Example: Two Injured Workers, Two Different Choices

The following is a hypothetical illustration only, not an account of an actual case. Every claim is different, and outcomes depend on the specific facts involved.

Imagine two warehouse workers, each with a torn rotator cuff from a lifting injury, both roughly a year out from the accident and both recently declared at MMI.

The first worker takes a full and final lump sum. His shoulder has responded well to physical therapy, and his doctor doesn’t anticipate surgery. He closes his case entirely, receives one payment, and moves on without any further involvement from the insurance carrier. Two years later, his shoulder is stable, and the decision has held up exactly as expected.

The second worker’s doctor flags a real possibility of arthroscopic surgery within the next few years if her symptoms progress. She settles on a wage-loss-only basis instead, taking a lump sum for her lost wages while her medical benefits stay open. Eighteen months later, the surgery becomes necessary. Because her medical claim was never closed, the carrier is still responsible for the procedure, and she isn’t paying out of pocket for a cost she couldn’t have predicted at settlement.

Same injury, same employer type, two very different bets on what the future would hold. Neither worker made the wrong choice. They made the right choice for what their doctor told them to expect.

Can I Reopen My Workers’ Comp Case After Settling?

It depends entirely on which kind of settlement you signed. A full and final settlement is exactly what it sounds like: once the Commission approves it, your claim is closed for good, and there’s no mechanism to reopen it, even if your condition worsens later.

A wage-loss-only settlement works differently, because your medical benefits were never closed in the first place. There’s nothing to “reopen” on the medical side; you simply continue seeking authorized treatment under your existing lifetime medical award. Where reopening does come into play is for a wage-loss claim that hasn’t been settled at all. Under Virginia Code § 65.2-708, the Commission can review and adjust an existing wage-loss award based on a genuine change in condition, but that review generally isn’t available more than 24 months after the last date compensation was paid, and it doesn’t apply once wage-loss benefits have been settled and closed.

This is exactly why the decision between these two settlement types carries so much weight. It’s not just about the check you receive today. It determines whether your medical coverage for this injury has a door that stays open or one that closes permanently the moment the Commission signs the order.

Talk to a Virginia Workers’ Comp Attorney Before You Sign

Choosing between cash now and medical coverage later isn’t a decision to make from a settlement letter alone. Once the Commission approves a full and final settlement, it’s final. There’s no do-over if your shoulder needs surgery eighteen months later or your condition changes in a way nobody anticipated.

Renfro & Renfro has represented injured workers across Virginia through settlement negotiations of every kind, from straightforward full and final settlements to complex cases involving Medicare Set-Asides. Before you sign anything the insurance company puts in front of you, talk to an attorney who can walk through your specific medical history, your future treatment needs, and what each settlement structure would actually mean for your case.

Schedule your free consultation with Renfro & Renfro today.

Frequently Asked Questions

Should I take a lump sum or keep my medical benefits open in Virginia? It depends on whether your doctor expects you’ll need future treatment for your injury. If your condition has fully stabilized, a full and final lump sum offers complete closure. If future care is likely, a wage-loss-only settlement keeps that cost off your shoulders. An attorney can help weigh your specific medical picture.

Is a lump sum workers’ comp settlement taxable in Virginia? Generally, no. Lump sum workers’ comp settlements aren’t treated as taxable income under Virginia or federal law. The main exception involves the SSDI offset; see our full breakdown of workers’ comp taxability for details.

How long does it take to settle a workers’ comp claim in Virginia? Once you and the insurance company agree on terms, Commission review typically takes about two weeks, and the insurer then has up to 44 days to mail your settlement check. Negotiating the terms beforehand can take considerably longer depending on your case.