How to Cash a Workers’ Compensation Settlement Check
Confidently cash your workers' compensation settlement check. This guide provides clear, practical steps for handling your payment securely.
Receiving a workers’ compensation settlement check marks a significant step after a workplace injury. Cashing it involves specific procedures that differ from a typical paycheck. This guide outlines the necessary steps to access your funds efficiently.
Understanding Your Workers’ Comp Settlement Check
A workers’ compensation settlement check resolves a claim for a work-related injury or illness. These checks are issued by an insurance company or employer, representing final compensation for medical expenses, lost wages, and other damages. Unlike regular paychecks, these settlements often involve a substantial lump sum.
These checks are legally binding instruments tied to a formal agreement. This can lead to more stringent verification processes from financial institutions. Settlement checks may also be made out to multiple parties, such as you and your attorney, requiring careful handling.
Preparing to Cash Your Check
Before heading to a financial institution, gathering necessary documents can streamline the cashing process. Identification is a primary requirement. You will need one or more forms of government-issued photo identification, such as a driver’s license, state-issued ID card, or passport. For larger amounts, some banks might request a second form of identification.
Properly endorsing the check is important. Sign the back of the check exactly as your name appears on the front. If the check is made out to multiple payees, such as you and your attorney, all listed parties must endorse it. Having a copy of your settlement agreement or other related legal documentation can be helpful, especially for large checks, as banks may request it to verify authenticity.
Cashing Your Check
Once you have identification and your endorsed check, you can proceed with cashing it. Several options are available. Your own bank or credit union is often the most straightforward choice, allowing you to deposit the check or receive cash directly. Inquire about their funds availability policies, especially for large amounts.
Another option is to visit the issuing bank. Even if you do not have an account, the issuing bank may cash the check, though they will require valid identification and may charge a fee. Check cashing services, often found in retail stores or dedicated establishments, provide an alternative for those without a bank account. These services typically charge a fee, which can be a percentage of the check amount, so comparing fees is advisable.
When presenting the check, the teller will verify your identification and endorsement. For larger checks, financial institutions may place a hold on funds to ensure the check clears and prevent fraud. Federal regulations require banks to make the first $225 of a deposited check available by the next business day. For amounts over $5,525, remaining funds may be held for two to seven business days. This hold allows the bank to confirm that the funds are available from the issuing bank.
Important Considerations When Cashing
Cashing a workers’ compensation settlement check can present unique situations. If your check is made out to multiple parties, such as yourself and your attorney, all individuals named as payees will generally need to endorse the check. All payees may also need to be present at the bank to cash or deposit the check, particularly for significant amounts, as banks aim to ensure proper authorization.
Cashing very large settlement checks can involve additional scrutiny. Banks may have internal policies that require longer hold periods for substantial deposits, sometimes extending beyond the typical few business days, to verify the check’s legitimacy and the availability of funds. Contact your bank in advance when dealing with a large check to understand their specific policies and any potential requirements. Some banks may even refuse to cash a very large check if you do not have an established account with them.
For individuals who do not have a traditional bank account, cashing a workers’ compensation check still has options. Besides visiting the issuing bank or using check cashing services, consider opening a basic bank account. While this might introduce a short delay for initial setup and fund availability, it often provides a more secure and cost-effective method for managing your funds in the long term, as check cashing services can charge fees.