A claimant is getting payments from her employer via their Permanent Health Insurance Scheme (approx. £500 a month), and her Incapacity Benefit has accordingly been reduced.

She has now been offered a lump-sum payment of £12,000 in full and final settlement of her health insurance claim - i.e. if she accepts the £12,000 she will get no further payments.

Am I right to assume that her Incapacity Benefit will then revert to its full level - i.e. the lump-sum payment will be ignored? And, if anyone has any experience of this, have they been caught by the notional income rule for HB purposes?