An Illinois workers’ compensation settlement is not calculated by multiplying the employee’s medical bills by a fixed number. There is also no standard settlement amount for a back injury, shoulder surgery, fracture, repetitive-trauma condition, or any other diagnosis.
The potential value depends on the employee’s average weekly wage, applicable benefit rates, permanent impairment, work restrictions, future earning capacity, unpaid temporary disability, disputed medical expenses, future treatment, vocational consequences, and the strength of the evidence connecting the condition to employment.
Illinois law provides formulas for certain benefits, including temporary total disability, permanent partial disability, scheduled losses, person-as-a-whole impairment, and wage differentials. The parties use those potential statutory benefits as a starting point when negotiating a settlement.
The final amount may be higher or lower than a basic permanent-disability calculation because a settlement can also resolve disputed benefits, future medical exposure, litigation risks, and other issues.
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A settlement is a negotiated agreement between the injured employee and the employer or insurance carrier. The employee agrees to resolve specified workers’ compensation rights in exchange for an agreed payment.
Most settlements are paid as a lump sum, although the terms of a particular agreement may provide another payment arrangement. An approved settlement commonly closes the claim permanently, including future cash and medical benefits, unless the contract expressly states that a particular benefit remains open.
The Illinois Workers’ Compensation Commission must approve the settlement. An employee cannot effectively waive compensation rights through an unapproved private agreement. Illinois law requires Commission approval, and current settlement contracts must be drafted and submitted electronically through CompFile.
There is no single formula that calculates every settlement.
A typical evaluation may include:
These components are not simply added together in every case. A settlement is a compromise. The insurer may discount a claim because it disputes causation, believes the employee can return to full work, or has obtained a favorable employer-selected medical opinion. The employee may demand additional value for closing future medical rights or resolving substantial unpaid benefits.
The employee’s average weekly wage, commonly called AWW, is the foundation for most disability calculations.
Illinois generally begins with the employee’s actual earnings in the relevant employment during the 52 weeks preceding the injury. The statute contains different calculation methods for employees who worked fewer than 52 weeks, missed qualifying periods, had irregular employment, or worked concurrent jobs known to the employer. Ordinary overtime and bonuses are generally excluded under the statutory calculation.
An incorrect AWW can reduce temporary disability payments, the permanent partial disability rate, wage-differential benefits, permanent total disability benefits, and the eventual settlement.
Workers should preserve pay stubs, payroll records, W-2 forms, time sheets, union agreements, commission records, and evidence of known concurrent employment.
Temporary total disability benefits, or TTD, may be owed when the employee is temporarily unable to work or is released to restricted duty that the employer cannot accommodate.
TTD is generally calculated at 66⅔ percent of the employee’s AWW, subject to the statutory minimum and maximum applicable to the accident date.
Suppose an employee had an AWW of $900. The basic TTD rate would ordinarily be $600 per week, subject to the applicable statutory limits.
A settlement evaluation should determine whether all TTD was paid for the correct period. Disputes may involve an improper termination of benefits, an employer-selected doctor’s return-to-work opinion, a light-duty offer, maximum medical improvement, or weeks during which no suitable restricted work was available.
Temporary partial disability, or TPD, may also be owed when the employee works temporary modified duty at reduced earnings. TPD is generally two-thirds of the difference between what the employee would have earned in the pre-injury position and the gross amount earned during temporary modified work.
Unpaid TTD or TPD can be negotiated as part of the settlement rather than being ignored merely because the employee has reached maximum medical improvement.
Permanent partial disability, commonly called PPD, compensates an employee for permanent impairment that does not leave the worker permanently unable to perform all employment.
Scheduled injuries, person-as-a-whole injuries, and qualifying disfigurement awards are generally calculated using 60 percent of the employee’s AWW, subject to the statutory minimum and maximum rate for the accident date.
The applicable rate should be verified through the IWCC benefit tables because statutory limits vary according to the injury date and benefit category.
Illinois assigns a number of weeks to specific body parts. The settlement calculation begins by multiplying the statutory number of weeks by the percentage loss of use and then multiplying that result by the employee’s PPD rate.
For example, the statute assigns 205 weeks to the loss of a hand. Assume an employee has:
Twenty percent of 205 weeks equals 41 weeks. Multiplying 41 weeks by the $600 PPD rate produces a basic scheduled value of $24,600.
That calculation does not guarantee a $24,600 settlement. The parties may disagree about the appropriate percentage, whether the condition is permanent, whether the injury is work-related, and whether additional benefits should be included.
Certain injuries are evaluated as a percentage loss of the person as a whole rather than under the scheduled body-part table. The statute uses 500 weeks for this calculation.
Assume an employee has:
Fifteen percent of 500 weeks equals 75 weeks. Multiplying 75 weeks by $600 produces a basic PPD value of $45,000.
Back, neck, torso, and other nonscheduled conditions may be evaluated under this method. The proper classification must be determined from the statute and controlling Illinois decisions rather than assumed from the diagnosis.
A physician’s impairment rating does not automatically determine the percentage used in a settlement or award.
For injuries occurring on or after September 1, 2011, Illinois requires consideration of five statutory factors:
No single factor is intended to control the determination.
An employee may have a relatively modest impairment rating but substantial occupational limitations. For example, a permanent lifting restriction may have a greater effect on a construction worker, warehouse employee, mechanic, or healthcare worker than on someone whose occupation does not require comparable physical activity.
The settlement evaluation should therefore consider the employee’s actual job duties, medical restrictions, surgery, range of motion, strength, pain, treatment history, age, and ability to continue working.
A scheduled or person-as-a-whole PPD calculation may not adequately measure the claim when the employee permanently cannot return to the usual occupation.
A wage-differential claim may be available when a work injury partially prevents the employee from pursuing the former occupation and the employee earns or can earn less in suitable employment.
The weekly benefit is generally 66⅔ percent of the difference between the earnings available in the former occupation and the amount the worker earns or is capable of earning after the injury.
Suppose the employee would have earned $1,200 per week in the original occupation but can earn only $750 in suitable post-injury work. The weekly difference is $450. Two-thirds of that difference equals a potential wage-differential benefit of $300 per week.
For injuries on or after September 1, 2011, wage-differential benefits generally continue until age 67 or five years after the award becomes final, whichever is later.
The settlement value of a wage-differential claim may depend on the employee’s age, expected duration of benefits, wage growth, vocational evidence, labor-market conditions, return-to-work efforts, and litigation risk. The negotiated lump sum is not necessarily the simple total of every possible future weekly payment.
Permanent total disability, or PTD, may apply when the employee is permanently unable to perform reasonably stable employment or has sustained a qualifying statutory loss involving two major members of the body.
PTD benefits are generally based on 66⅔ percent of the AWW, subject to statutory minimums and maximums.
A PTD settlement can involve substantial future exposure because the insurer may otherwise remain responsible for continuing weekly benefits and medical treatment. The valuation may require medical opinions, vocational testimony, life expectancy considerations, future medical projections, and analysis of the employee’s education, age, skills, and work history.
A worker should not evaluate a potential PTD settlement as though it were an ordinary PPD claim.
Workers’ compensation medical benefits are generally paid separately from permanent disability benefits. A claim is not ordinarily valued by adding all medical bills to the PPD calculation.
The settlement must nevertheless address any unpaid or disputed medical expenses. The contract should identify whether the employer will pay the providers directly, whether the bills are included in the settlement amount, or whether the employee will assume responsibility for them.
An approved settlement usually closes future medical rights unless the agreement expressly preserves them. If future medical care is closed, the worker may become responsible for later treatment even if the condition worsens.
Future medical exposure can include:
The value assigned to future care should reflect the medical prognosis, probability of treatment, anticipated cost, insurance considerations, and risk that the procedure may occur sooner than expected.
Maximum medical improvement, or MMI, generally describes the point at which the condition has stabilized and substantial further recovery is not anticipated.
Illinois law does not require every employee to wait until MMI before discussing settlement. Settling beforehand can nevertheless be risky because the final diagnosis, surgical needs, restrictions, permanency, and ability to return to work may remain uncertain.
A worker who settles before understanding the prognosis may accept an amount that does not account for future surgery, permanent restrictions, or reduced earning capacity.
The treating physician and the employer-selected examiner may disagree about whether MMI has been reached. That dispute can materially affect settlement negotiations.
A preexisting condition does not automatically eliminate settlement value. Illinois workers’ compensation may cover an employment-related aggravation or acceleration of an earlier condition when supported by medical evidence.
The insurer may discount its offer when records show earlier symptoms, prior treatment, previous surgery, or degeneration. The employee may respond with evidence that the person worked without restrictions, required little treatment, or experienced materially different symptoms before the workplace accident.
The settlement should reflect the additional disability, treatment, and wage loss caused by the work-related aggravation rather than treating every preexisting finding as a complete defense.
A settlement reflects risk as well as potential benefits.
An insurer may dispute whether:
A claim with substantial medical losses may settle for less when the insurer has a meaningful chance of defeating compensability. A lower-value injury may settle more favorably when the accident and medical causation are well documented.
The potential arbitration award should therefore be weighed against the possibility of delay, appeal, or receiving no compensation on a disputed issue.
The gross settlement is the total amount stated in the contract. It is not necessarily the amount the employee receives.
The net recovery may be reduced by attorney fees, litigation expenses, Medicare-related allocations, and any other deductions specifically identified in the settlement documents.
Illinois generally limits attorney fees in an original workers’ compensation claim to 20 percent of the compensation recovered and paid, subject to statutory caps, exceptions, and Commission approval.
Case expenses may include charges for medical records, physician depositions, court reporters, expert testimony, vocational evaluations, and other evidence needed to pursue the claim.
The employee should review a written settlement breakdown showing the gross amount, attorney fee, costs, allocations, and expected net payment before signing.
The parties must consider Medicare’s interests when a settlement closes future medical treatment related to the work injury.
A Workers’ Compensation Medicare Set-Aside Arrangement allocates part of the settlement for future work-related medical services that Medicare would otherwise cover. The allocated funds must be properly exhausted before Medicare pays for covered treatment related to the settled injury.
CMS currently reviews proposed set-asides when the claimant is a Medicare beneficiary and the total settlement exceeds $25,000, or when the claimant has a reasonable expectation of Medicare enrollment within 30 months and the anticipated total settlement exceeds $250,000. Submission for CMS review is recommended under CMS policy rather than required by a specific statute or regulation.
A Medicare allocation is not additional settlement money. It restricts how the designated portion may be used and can affect the employee’s net unrestricted funds.
Yes. Illinois employees generally cannot waive statutory workers’ compensation rights without Commission approval.
All settlement contracts must currently be drafted and filed electronically through CompFile. A settlement can also be submitted as a “No-App” settlement when no IWCC case number previously existed.
An unrepresented employee must participate in a hearing before an arbitrator prior to approval. The arbitrator reviews the terms and whether the employee understands the agreement, but the arbitrator remains neutral and does not serve as the employee’s attorney.
A full and final settlement generally closes the rights identified in the contract, even when the medical condition later worsens. Any benefit that the parties intend to preserve should be expressly identified in the agreement.
This differs from certain awards paid through the Commission. Some awards may remain subject to statutory review when disability later increases, decreases, or ends.
The employee should not sign a settlement based on the assumption that the case can simply be reopened if additional treatment becomes necessary.
Not directly. Medical bills can demonstrate treatment and may include disputed expenses that must be resolved, but permanent disability is calculated using statutory benefit methods rather than a medical-bill multiplier.
For a scheduled injury, the basic calculation is:
PPD rate × statutory weeks for the body part × percentage loss of use
For a person-as-a-whole injury, the basic calculation is:
PPD rate × 500 weeks × percentage loss of the person as a whole
The parties may negotiate a different settlement after considering medical, vocational, evidentiary, and litigation issues.
Ordinary PPD is generally based on 60 percent of the AWW. TTD, TPD, wage-differential, and PTD benefits generally use a 66⅔-percent calculation, subject to the specific statutory formula and rate limits.
No. Surgery may increase treatment expenses, recovery time, permanent restrictions, and impairment, but value still depends on causation, outcome, work consequences, future care, wages, and the strength of the evidence.
No. Illinois considers the impairment report, occupation, age, future earning capacity, and disability corroborated by treating records. No single factor controls the PPD determination.
Yes. Unpaid or disputed temporary disability benefits may be included in the negotiations and should be evaluated separately from permanent impairment.
It depends on the contract. Some bills may be paid directly by the employer, while disputed bills may be included or allocated within the settlement. The agreement should state who remains responsible.
It can be negotiated, but the contract must clearly preserve the benefit. An ordinary full and final settlement generally closes future medical rights.
Doing so may be risky because the final diagnosis, restrictions, surgery needs, and permanent disability may not yet be known. The proposed terms should account for those uncertainties.
Illinois generally limits the fee in an original claim to 20 percent of compensation recovered and paid, subject to statutory caps, exceptions, and Commission approval.
Yes. The Commission must approve an agreement that compromises or waives workers’ compensation rights. Current contracts are submitted through CompFile.
A No-App settlement may be submitted through CompFile even when the case does not already have an IWCC number. The system assigns a case number and arbitrator during the settlement process.
A full and final settlement ordinarily prevents reopening unless the contract expressly preserved a right. Awards and settlements do not always have the same legal effect.
No dependable average can predict a particular result. Wages, injury classification, permanent impairment, restrictions, future treatment, earning loss, and disputed liability vary substantially from case to case.
Calculating an Illinois workers’ compensation settlement requires more than applying a permanent-disability percentage. The evaluation may involve unpaid TTD, the correct AWW, medical bills, future care, permanent restrictions, PPD, wage loss, vocational evidence, Medicare obligations, litigation risk, and the rights being permanently closed.
Robert Edens Law Office represents injured employees throughout Antioch, Waukegan, Grayslake, Lake Zurich, Woodstock, Barrington, Lake County, McHenry County, and surrounding Northern Illinois communities. The firm identifies more than 20 years of experience representing injured workers.
Call (847) 395-2200 or contact Robert Edens Law Office to request a consultation about an Illinois workers’ compensation settlement.
For a broader analysis of medical benefits, TTD, PPD, wage differentials, permanent total disability, and claim valuation, read Illinois Workers’ Compensation Benefits And Claim Value.
This page provides general legal information and does not guarantee a settlement amount or case result. Each claim depends on its wages, accident date, medical evidence, work restrictions, future needs, disputed issues, and applicable law.
The Law Offices of Robert T. Edens, Personal Injury and Workers' Compensation Law Office, have offices in Antioch, Waukegan, Grayslake, Woodstock and Barrington. We represent clients throughout the communities of Antioch, Waukegan, Grayslake, Barrington, Woodstock, Buffalo Grove, Deer Park, Gurnee, Lake Zurich, Round Lake, McHenry, Cary, Crystal Lake, Libertyville, Lincolnshire, Mundelein, Vernon Hills, Wheeling, North Chicago, Zion, Inverness, Palatine, Wauconda, Island Lake, Fox Lake, Barrington Hills, Spring Grove, Lake Bluff, Lakemoor, Long Grove, Lake Villa, Kildeer, Wadsworth, Indian Creek, Fox River Grove, Lindenhurst and other cities within Lake and McHenry Counties Illinois.
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