When injured workers in Nevada accept a lump sum payout for PPD benefits, the payment amount is reduced to reflect the present value of the award and claimants may be giving up important rights.
Permanent Partial Disability Payments
Under Nevada law, lump sum permanent partial disability (PPD) awards are based off the total installment payments that would have been paid on the award. The lump sum award is reduced to present value, which is the worth of all installment payments after they are discounted at a specified rate. In theory, if an injured worker does not touch his/her monthly or annual installments until age 70, the untouched total including interest would equal the total lump sum award. However, an examination of the total figures using an insurer’s calculation method shows a big discrepancy in totals between installment payments and a lump sum award. The total benefits award for installment payments is much higher than the lump sum total.
Permanent Partial Disability (PPD) payments are paid to injured workers with permanent impairments, but who are still able to work in some capacity. Once a workers compensation claim has been accepted, a worker can request installment payments or a lump sum payout of PPD benefits. If installment payments are selected, they are usually paid until the worker reaches 70 years of age. If a lump sum payout is selected, the following restrictions apply:
- Injuries on or after July 1, 2017 – If the worker’s disability rating is higher than 30 percent, the worker can receive the value of a 30 percent disability rating in a lump sum. The award for disability beyond the 30 percent will be paid in installments.
- Injuries on or after January 1, 2016, and before July 1, 2017 – If the worker’s disability rating is 30 percent or less, the worker can receive the entire award in a lump sum. If the disability rating is higher than 30 percent, the worker can receive the value of a 30 percent disability rating in a lump sum and the remainder of the award in installment payments.
- Injuries before January 1, 2016 – If the worker’s disability rating is 25 percent or less, the worker can receive the entire award in a lump sum. If the disability rating is higher than 25 percent, the worker can receive the value of a 25 percent disability rating in a lump sum and the remainder of the award in installment payments. The insurer also now has the option to payout the remaining balance of those older claims, up to the current 30% cap.
In Nevada, any portion of a lump sum PPD award is reduced to its present value using the Division of Industrial Relations (DIR) present value table. That table is statutorily mandated to be updated every July, based on the US 30 year treasury bond rates, and the current social security mortality rates. This is based on the concept that a dollar received today is more valuable than dollars received in the future.
In Nevada, some workers are eligible for vocational rehabilitation services following an injury. This includes job retraining, educational courses, and assistance in finding a new job. Depending on a worker’s disability rating, some workers are also eligible for bi-weekly maintenance payments while they are receiving vocational rehabilitation services for up to 18 months. When a worker agrees to a lump sum PPD award, he/she gives up vocational rehabilitation benefits in exchange for a lump sum payout.