I enjoy most people I talk to about their Illinois work injuries. Most people are nice and are sincerely looking for help. If you are honest and direct with me, I will do the same for you.

I unfortunately had a call recently with an injured worker who was not so nice. He filled out a form on our website and was asking about what his case was worth and what the present cash value would be for a settlement. Present cash value is an advanced work comp term so I knew he had a case filed already.

Before I called I wanted to see what had happened on his case so I looked up his info on the Illinois Workers’ Compensation Commission website. There was nothing filed under his name.

So I called him and asked for John. The person who answered acted like I had the wrong number and then quickly said, “I mean, sorry, I’m John.” It was obvious he submitted a fake name to me. I told him I wanted to help, but needed his real name. He said, “Why would I do that?” and the call went south from there. Like I said, I’ll help you if you are honest, but if you aren’t and won’t share info, there’s nothing I can do.

He clearly had a lawyer and if I was able to talk to him I probably would have made him an extra $100,000 or more. The call did inspire me to write a post on what present cash value is.

Basically he had a major back injury with significant permanent restrictions. His employer doesn’t have work for him and he’s looked for a job for five months without success. He could get jobs outside of his normal field making around $25 an hour less. He’s only 40 so he has a 25 year work life expectancy. He wanted to know how to calculate the present cash value or his case if he settled.

If you assume he works 40 hours a week, he has a wage loss of $1,000 a week. For work comp purposes for a wage differential, we take 2/3 of that in calculating a settlement. So his loss is $667.00 a week or $34,684.00 a year. Over his 25 years left to work until he turns 65, that is $867,100.00 of benefits.

His case is not worth $867,000. No insurance company is going to give you a lump sum today of every penny you’d eventually earn. Instead what we do is figure out what the present cash value of that amount is. In other words, it’s a measure of how much getting $667.00 a week for 25 years would be now if you got it in a lump sum.

To do this we use a device called a present cash value calculator. It’s the amount you would need to invest now to end up with that amount in the future. We used to do it by hand on a calculator with a cheat sheet. Now there are websites where you can plug your numbers into.

How Do You Determine A Fair Present Cash Value Settlement For Workers Compensation?

There are two ways to approach this. The first is figuring out the present cash value with the calculator.
Depending on what interest rate you choose (5-6% is common) you can get different amounts. I didn’t run this guy’s numbers, but I would guess it’s around $250,000.

The second way to do this is ignore the calculator and just look at the yearly loss which is $34,684.00. If my client is in good health, I would argue that a fair settlement would be somewhere between 7-10 years of benefits. That means a fair settlement would be somewhere between $240,000 and $350,000.

In that case, I would talk to my client, see what their goals are and strategize from there. I recall a case with a younger worker who wanted $300,000 for his wage loss. The insurance company wouldn’t go over $225,000 so he just took his weekly checks for about three years and eventually they bought him out for the $300,000 we wanted. So in the end he actually pocketed much more by being patient.

Every case is different. Your health, age, other earning opportunities and goals factor into all of this.

There’s another factor too. Remember I said I think I would have helped this guy get an extra 100k. He told me in his email that he was willing to close out his medical rights without compensation for that. That’s a terrible idea. He’s basically saying he will give up his leverage.

In his case, he likely will need another fusion surgery in the future. Under Federal law, he has to consider the possibility that Medicare might have to pay for his bills. So on top of his wage loss settlement, he should also get a Medicare set aside. Basically that means the insurance company has to fund an account, which he can control, for his future medical needs related to his work injury.

That money can go in his pocket and if he needs a fusion it could easily be $100,000 or more now on top of whatever he gets for a settlement.

The bottom line is that there is more than one way to look at present cash value. What you want is a fair settlement and the most you can get. Your unique case facts will determine what this is.

If you are nice and honest and want a free consultation, call us any time at 312-346-5578.