Permanent Disability Advance: The Benefits and Costs
Learn whether to take an advance on your permanent disability benefits.
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If you are permanently disabled from a work-related injury, you may be eligible for a monetary award to compensate you for your permanent disability through workers' compensation. However, that award is almost never paid early in your period of disability or at the onset of your disability.
It can be financially difficult to wait to receive your permanent disability award, especially if you are not working, or are working only in a limited capacity. A permanent disability advance provides one possible option to obtain money up front, but it is important to understand what you may gain or lose by choosing to accept such an advance.
What Is a Permanent Disability Advance?
A permanent disability advance is a lump sum payment of your permanent disability award, which is paid in advance of when you are scheduled to receive your permanent disability payment. You forgo your right to receive the permanent disability in the future at the time you would otherwise receive the award, by taking the advance.
The Advantages of a Permanent Disability Advance
The largest benefit of accepting a permanent disability advance is receiving money in the short term. This means you can pay off bills, including mortgages, that will allow you to retain property and vehicles that you need to live. You can also pay off your medical bills and other large debts. If you have a large amount of high-interest consumer debt, such as credit card debt, paying a fee to take the permanent disability in advance rather than waiting may actually save you money compared to paying the interest on the debt.
The Disadvantages of a Permanent Disability Advance
A permanent disability advance is not for everyone. If you have the financial resources to make ends meet until you receive your permanent disability award at the scheduled time, you will likely be better off financially.
First, you might be charged a fee for requesting and receiving a permanent disability advance. This is a fee you wouldn't have to pay if you wait and receive the permanent disability award at the regular time. You might also lose an amount of the principal of your permanent disability award – a partial loss in the award you otherwise would receive.
Second, it is important to consider whether you lose any rights by accepting a permanent disability advance. This may include loss of your right to appeal the amount of the permanent disability awarded to you. You should talk to a workers' comp attorney in your area before accepting a large permanent disability advance to ensure that you are aware of all the rights you are giving up and can make the most informed choice.