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An Important Overview of Maintenance and Cure Payments

Everyone who has spent time on the open seas knows that the ocean can be a brutal and unforgiving place. For people who make their living on the open water, it is important that they have some form of safety net that will provide compensation if they are injured on the job. This is called maintenance and cure payments. These payments are meant to cover a variety of costs including daily living experience (called maintenance) and financial assistance for medical bills (called cure). Ideally, these payments would continue until they are fit to return to their work. Many companies will offer advances on employee payments while they are injured in addition to the maintenance; however, this has a few problems that people should be aware of when people are recovering from injuries.

Tax Law Regarding These Payments Can Get Confusing

Anyone who is receiving maintenance and cure payments should understand that they do not typically have to make tax payments on funding categorized as maintenance. The advances that many employers offer is a different story. If the employer categorizes these advances as wages, they are seen as a paycheck that is being paid while the worker is injured. Like any other wages, these advances are subject to taxation. If an employee has a choice regarding whether or not they receive these advances of wages or maintenance, they should always select to receive the advances as maintenance. This way, they owe fewer taxes at the end of the year.

How Advances Might Impact a Legal Battle

Most people would assume that employers providing wages to employees while they are injured and recovering is an altruistic gesture. Most of the time, this is true; however, there are some cases when employees and employers wind up in a legal battle regarding maintenance payments, cure payments, or other legal issues related to the job. The employer can point towards the advance payments as a sign that they were trying to do the right thing. This can score favor with the judge and potentially swing the legal case in their favor. An experienced defense attorney might have a way around this; however, this is still something that employees should be aware of.

How do Advance Payments Impact Potential Settlement Awards?

Sometimes, an employee is injured on the job as a result of a lack of oversight on the end of the employer. While an employee might be receiving advances, they might also be seeking a larger settlement due to a mistake on the employer’s end. If a settlement is awarded, the amount awarded is often decreased by the amount of the advance payments. Again, employees should make sure that these payments are categorized as maintenance payments instead of advance payments. This way, the settlement award isn’t reduced by the payments.

 

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