The Settlement Alliance

Medicare and Medicaid Liens

Medicare and Medicaid Liens

Dec 19, 2016

When you or your loved one is injured, the last thing you want to think about is how to pay your medical bills. Unfortunately, if you received Medicare or Medicaid benefits, your settlement may be affected. It’s important to make sure that any liens are resolved so that you don’t expose yourself to severe financial penalties, including the loss of settlement proceeds. But what is the difference between Medicare and Medicaid liens—and how can you protect yourself?

Medicare Liens

Medicare is an entitlement benefit, meaning that you do not have to meet a particular low-income threshold in order to be eligible for it (eligibility is based on several factors, including age and disability status). It is administered by the federal government. If you are currently or soon expect to be a Medicare beneficiary, and Medicare pays for any medical costs associated with your lawsuit-related injury, you may owe Medicare some money.

It happens more often than you may think. For instance, maybe there is some initial uncertainty over who is responsible for paying medical costs. The medical provider (a hospital, for example) still needs to bill someone, so they may bill Medicare as the primary payer. That’s where Medicare Secondary Payer (MSP) laws come into play. As long as the medical costs are Medicare-eligible, Medicare will make what is referred to as a “conditional payment.” If the person who received medical treatment receives money from a settlement, judgment, or other payment, Medicare is allowed to recover what it paid out. In fact, MSP laws state that Medicare must be the first payee of a lawsuit.

The burden is on the beneficiary to report their case to Medicare (often with the assistance of their attorney). Medicare’s Benefits Coordination and Recovery Center (BCRC) then begins to track any conditional payments and once the case settles, will issue a formal demand letter for reimbursement.

If you receive funds for future injury-related medical care, you may want to consider setting up a Medicare Set-Aside (MSA) with some of your settlement money. An MSA is Medicare’s preferred financial vehicle for ensuring that Medicare does not pay for future medical expenses that should be paid for out of the settlement.

Medicaid Liens

Medicaid works differently than Medicare. It is a needs-based benefit, so eligibility is dependent on a meeting a low financial threshold ($2000 in assets if single; $3000 if married). Medicaid is administered at the state level, although the federal government does jointly fund each state’s Medicaid program.

There are several instances in which Medicaid may impose a lien or try to recover money that covered services for a beneficiary. For instance, if a Medicaid beneficiary owns a home, but is permanently institutionalized, Medicaid may put a lien on the beneficiary’s property, unless a spouse, child under the age of 21, or blind or disabled child of any age live in the home.

Medicaid may also impose a lien if Medicaid benefits were incorrectly paid as the result of a court judgment. In the event that you receive a personal injury settlement, Medicaid can recover the cost of any Medicaid assistance you received beginning at the time the injury occurred. Rules can vary from state-to-state.

It’s important to note that if you are on Medicaid and you expect to receive a settlement, you’ll want to review your options with a settlement planning expert. The acceptance of a lump sum settlement will most likely make you ineligible for Medicaid and other needs-based government benefits. There are some strategies, though, that may help you protect your government benefit eligibility.

Contact us to learn more

The Settlement Alliance works with the nation’s leading lien resolution firms to help attorneys and their clients resolve liens as efficiently as possible. Contact us at or 800-464-2500 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
  • MetLife
  • Mutual of Omaha
  • New York Life
  • Pacific Life
  • Prudential