---
name: settlement-offer-letter
source: https://app.decimal.ai/s/settlement-offer-letter@1/SKILL.md
source_sha256: e7d38213a460
---

# Draft the offer so the payment actually buys the insurer peace

An offer letter is not a friendly note proposing a number. It is the first half of a contract, and
the money only makes sense if it closes the claim for good. Left to itself, the model writes the
warm version: "We have reviewed your claim and are pleased to offer $X to resolve this matter.
Please let us know if you accept." That letter states a number and nothing else — it does not say
what the money buys, whether the insurer is admitting fault, who else has a hand out for the same
dollars, how the payout is taxed, or when the offer dies. Each of those omissions is a way the
insurer pays and *still* has exposure: the claimant cashes the check and sues for more, a health
plan or Medicare demands its lien out of money already gone, or the "offer" is treated as open
forever.

The discipline: **a written settlement offer carries the protective clauses regardless of how
small or friendly the claim feels.** Before sending, walk the checklist below and confirm each
clause is present — or, if a fact you need is missing (the lienholders, the acceptance deadline),
say what is needed rather than dropping the clause.

## The clauses every offer letter must carry

1. **The release the money buys — state its scope.** Say the payment is offered in exchange for a
   full and final release of *all* claims arising from the incident — not just the medical bills on
   the table today. Name what that sweeps in: known and unknown injuries, future or worsening
   consequences of the same injury, and derivative claims (loss of consortium, a spouse's or
   parent's claim). Identify who is released — the insured, the insurer, and their agents — and
   whether the release covers this one claimant or all potential claimants. An offer that leaves the
   scope vague buys a receipt, not a release: the claimant can take the money and come back for the
   part you never named.

2. **No admission of liability.** State plainly that the offer, and any payment, is a compromise of
   a disputed claim and is **not** an admission of fault or liability by the insured or the insurer.
   Silence here lets the offer itself be read as conceding the insured did something wrong — which
   matters if the settlement falls through, if there are other claimants, or in any later
   proceeding. The compromise-of-disputed-claim framing is what keeps the offer from becoming
   evidence against your insured.

3. **Liens and subrogation — clear them before the money leaves.** Any party with a right to be
   repaid out of this recovery must be accounted for *before* the claimant nets a dollar: medical
   providers' liens, a health plan's or ERISA plan's reimbursement right, workers'-comp
   subrogation, and government payers — Medicare and Medicaid — whose interests carry their own
   teeth (Medicare's secondary-payer conditional-payment recovery). State that the settlement is
   conditioned on these being identified and satisfied, and say how you are protecting against them:
   the claimant warrants they will resolve all liens and hold the insurer harmless, and/or the
   insurer holds back the disputed amount or issues checks jointly to the claimant and a known
   lienholder. Paying the full sum to the claimant and trusting them to settle a Medicare lien is
   how the insurer ends up paying twice.

4. **Tax-reporting caveat.** Note that the settlement may have tax-reporting consequences and that
   the letter is not tax advice. The working rule a claims professional flags: compensation for a
   physical injury or physical sickness is generally not taxable, but portions that are not —
   interest, punitive damages, lost wages or emotional-distress damages without a physical injury —
   may be taxable and reportable to the claimant on a Form 1099. Tell the claimant to consult their
   own tax advisor. This protects the insurer from being blamed later for a tax surprise and sets up
   correct year-end reporting.

5. **Acceptance and expiry mechanics.** An offer with no deadline is an option the claimant holds
   for free. State how to accept — typically by signing and returning the enclosed release — and set
   an expiry: the offer is open until a specific date (or a stated number of days) and is
   automatically withdrawn if not accepted by then. State when payment issues — e.g. within a set
   number of days after the insurer receives the signed release and lien resolution — so acceptance
   and payment are not the same event. Without these, there is no pressure to decide and no clean way
   to withdraw.

## The self-check before sending

Read the draft against the five clauses and name, for each, the sentence that carries it. A missing
clause is the gap to close before the letter goes out. Two failure modes to catch:

- **The bare-number letter** — a courteous paragraph offering an amount with none of the five
  clauses. It reads fine and protects nothing.
- **Papering over a missing fact.** If you don't know the lienholders, the correct release scope, or
  the deadline the file calls for, say what is needed — do not invent a lien amount, a claimant's
  name, or a release that covers parties you can't confirm. A fabricated term is worse than a flagged
  hole.

## Output

Produce the offer letter with all five clauses present, in plain business language a claimant can
read. Lead with the offer amount and what it settles, then carry the release scope, the
no-admission statement, the lien/subrogation condition, the tax caveat, and the acceptance-and-expiry
terms. Where a needed fact is absent from what you were given, mark it as a blank to fill rather than
guessing it.