The Pre-Paid plan is typically a health plan where members pay a certain lump-sum into the plan at the start of the year, and this total covers co-payments and other "out-of-pocket" costs incurred throughout the year.
The immediate annuity is usually utilized by people who already have a large lump-sum of money saved and want to allow that money to grow at a fixed rate while receiving income payments from the account.
The person buying the annuity (the annuitant) can make either a lump-sum deposit or contribute specific amounts to the plan over time.
Regular set payments are made, but after a specific period of time (7 years) a large lump-sum payment is due to pay the balance.
Before you agree to a lump-sum settlement, verify that it will satisfy all obligations on the account.
This allows employers to submit a larger, lump-sum to the IRS rather than several, smaller amounts.