The Settlement Alliance

Medicare, Lawsuits, and Future Medical Expenses

Medicare, Lawsuits, and Future Medical Expenses

Dec 1, 2016

For claimants who are on Medicare or who expect to be on Medicare in the near future, paying for medical bills related to their settlement can become confusing. If the claimant already has insurance that can adequately cover their future medical expenses or if their settlement will sufficiently provide for payment of their medical expenses, Medicare then becomes the “secondary payer.” By law, Medicare cannot pay for medical expenses that would otherwise be covered by another payer (in this case, insurance or settlement funds).

What if Medicare already paid for lawsuit-related medical expenses?

The Medicare Secondary Payer provisions of the Social Security Act state that:

  1. Medicare must be notified when it may have an interest in a lawsuit,
  2. That interest must be satisfied, and
  3. Medicare must be the first payee in the lawsuit.

If Medicare already paid for lawsuit-related medical expenses, Medicare has the right to recover funds from the settlement, judgment or award in which there was found to be a liable third party. Failure to comply with MSP provisions can result in severe penalties for the claimant, and even for their attorney.

Medicare Set-Asides

The Centers for Medicare and Medicaid Services (CMS) recommends that claimants who are on (or expect to be on) Medicare and who receive settlement funds to pay for future medical care establish a Medicare Set-Aside (MSA). A MSA is simply an account that “sets aside” the funds to pay for lawsuit-related medical care. Prior to finalizing the settlement, the claimant can choose to fund the MSA with a lump sum or with a structured settlement annuity. It is important to point out that under current law, a MSA is not a requirement; it is merely CMS’ preferred method of protecting Medicare’s interests.

How should the claimant determine the amount to put in a Medicare Set-Aside?

Rather than simply estimating future medical expenses, the claimant should consider having a professional determine the proper allocation. If the MSA is underfunded and Medicare ends up paying for medical care that should have been paid for by another party, the claimant could be penalized. On the other hand, the claimant doesn’t want to overfund the MSA, either. A professional can help thoroughly vet all medical expenses that could be Medicare-eligible, and will use that information to develop a solid estimate for an allocation.

Who manages the Medicare Set-Aside?

In some cases, the claimant can choose to self-administer their MSA. However, professional administration is often recommended as the preferred alternative to self-administration. Professional administration companies are experienced in following the procedures needed to maintain compliance with CMS guidelines, lessening the risk of costly mistakes.

Want to learn more?

The Settlement Alliance works with the top Medicare Set-Aside companies in the nation. Contact us today to learn more.

We are proud to partner with the highest rated structured settlement providers in the industry:

  • American general Life Companies
  • Berkshire Hathaway Structured Settlements
  • Liberty Life Assurance Company of Boston
  • MetLife
  • Mutual of Omaha
  • New York Life
  • Pacific Life
  • Prudential