HomeLibraryMaintenance & CureThree Key Differences Between Maintenance and Cure Payments & Advances

Three Key Differences Between Maintenance and Cure Payments & Advances

filing taxes, maintenance vs. advances

When seamen are injured, they are entitled to maintenance and cure payments to cover the cost of their day-to-day living expenses (maintenance) as well as their medical bills until they are fit for duty (cure). Oftentimes, a company will offer to pay what they refer to as “advances” to seamen while they are recovering, in addition to the maintenance payments.

This may seem like a good idea, but there are a few pitfalls of which seamen should be aware as they are going through the claims or court process after their injuries.

Maintenance Vs. Advances: Three Key Differences

  • Advances are taxed. Maintenance is not.
  • Advances are voluntary. Maintenance is legally required.
  • Advances you will have to pay back if you win your case. Maintenance you do not have to pay back.

How Taxation Affects Advance Payments

Firstly, seamen need to be aware of how the compensation payments they receive are taxed. In most cases, injured seamen will not have to pay taxes on maintenance payments.

However, employers often categorize advances as wages. Essentially, they are continuing to pay the injured worker wages while they are injured. And like wages, advances will be subject to taxes.

Therefore, it’s more advantageous for an injured worker to receive maintenance payments, rather than advances, because they will owe fewer taxes at the end of the year.

Employers & Brownie Points in Court

On the surface, it may seem like a courteous thing to do for an employer to offer to pay an injured employee more than he or she is legally entitled. In fact, at first, injured seamen are generally delighted that they are receiving these extra funds.

However, there is an interesting twist to this generosity.  If the case goes to court, the employers often try to win the judge’s or jury’s favor by saying that they voluntarily gave more than they were legally required. While there are some legal defenses against employers who try to use this tactic, the employer may still win a few brownie points in the judge’s or jury’s minds.

Impact of Advances on Settlement Awards

A key question regarding types of compensation for injured seamen is: “How is my settlement award going to be affected by advances?”  In many cases, a seaman’s settlement award will be reduced by the number of advances he or she has received.

This is why it’s very important to carefully scrutinize any payments the employer provides to determine if there is any indication that they are advances, rather than maintenance payments.

Injured workers should look at the checks for key phrases, such as:

  • partial settlement;
  • toward settlement; or
  • an advance of settlement.

At the Young Firm, we believe that injured seamen should be compensated appropriately. Maintenance and cure (and other benefits) are fundamental to maritime common law, and we believe those rights should be protected. We have a passion for securing the rights of injured maritime workers and helping them fight for sufficient settlements.

If I Hire An Attorney, Will My Company Cut Off My Advances?

Many maritime companies provide employees with monthly payments that the company characterizes as “advances”. While it is true that most companies will terminate these “advancements” if you file suit, in almost all cases you will have other means of financial support which can be used in such situations.

If you have any short or long-term disability insurance, you can apply for and typically receive such benefits during your case. Additionally, some state laws allow attorneys to advance clients living expenses while their suits are being prosecuted. Finally, if the company has characterized your monthly living expenses as “advances”, a good maritime lawyer will argue that such payments should have been included under your “maintenance” payment.

It is always best to think long term in regard to your maritime injury rather than month to month. You should be concerned about your future over the next three to five years and not your monthly expenses over the next three to five months.

Securing a Fair Settlement

If you or a loved one has suffered a maritime injury and are unsure of what kinds of compensation to which you may be legally entitled, feel free to contact our office for a consultation.

We can review your case, determine what payments you should be receiving (e.g. maintenance and cure), and help you seek the highest settlement possible. Call The Young Firm at today at 504-680-4100.

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