Your understanding is basically correct. The lump-sum election potentially reduces the taxable amount of the benefits that you received in 2019. After you go through the lump sum interview in TurboTax, TurboTax will determine whether the lump-sum election reduces your tax. If so, it will use the lump-sum election on your tax return. If not, it will just report it as if the payment was all for 2019.
The lump-sum election is your only option to reduce your 2019 tax. You cannot amend your 2018 tax return.
