BLOG: YOUR SETTLEMENT AND MEDICARE
If you are a Medicare Beneficiary or likely to become a Medicare beneficiary in the near future, there are special rules you need to be aware of if you are injured in an accident. When a person is injured in a car accident, a work-related injury or because of someone else’s negligence and there is some form of liability insurance, those insurance policies will pay for the medical expenses before Medicare does. The injured person is obligated to file a claim and make sure the workers’ compensation or no-fault insurer are taking care of the medical bills.
When an insurance carrier refuses to pay a bill that is in dispute, Medicare will pay the expense ‘conditionally’ if the services provided are what Medicare generally pays for. The payment is made on the ‘condition’ that if there is a settlement or judgment in favor of the beneficiary, Medicare will be reimbursed promptly.
Medicare is required by statute (42 U.S.C. § 1395y(b)) to seek reimbursement for conditional payments related to the settlement. Medicare is prohibited from making payment for medical expenses where payment has been made (that is, where the beneficiary obtains a settlement, judgment, award, or other payment).
Your attorney should know how to preserve the money from your judgment or settlement, so it is used for future the medical expenses associated with the injuries you received in the accident. While Medicare will continue to pay for medical services that are NOT related to the injuries you received in the accident, you will be expected to use a specially approved portion of your settlement funds to pay for those expenses and to provide annual reports to Medicare about how those funds are being used. Only when all the funds have been depleted on legitimate documented medical expenses, will Medicare begin to pay for those injuries related to the accident.
Some attorneys and insurance companies will agree to ‘leave medical open’. This means that the parties can settle some economic parts of the case like ‘wage loss’ or ‘pain and suffering’. The insurance company will continue to pay for the medical expenses associated with the injuries that arise from the accident and Medicare will pay for everything else.
Another alternative is to fund a Medicare Set Aside (MSA) Trust. Based on an expert life care report that estimates the cost of all future medical expenses and with the approval of Medicare, a certain portion of the settlement is placed into an interest-bearing trust account that must only contain money from the settlement. Additional money from other sources should never be put into the trust account. This is called comingling and could harm the validity of the trust and the funds that it holds.
The injured person or a family member can administer the trust by making payments to medical providers and keeping good records. Sometimes the trust account will be funded by the insurance company in a single lump sum. Other times it may make arrangements that payments are made annually through the purchase of an annuity.
When all the funds have been spent correctly on medical expenses related to the accident, Medicare will pick up the ball and begin to pay for the same expenses.
If a person misuses the funds, they can lose the right to have Medicare pay for those health care services in the future. Some examples of well-intentioned but wrongful misuse of trust funds would be home or vehicle modification to accommodate the injured person, paying a friend or family member to provide non-skilled home care or transportation services, or paying for health care services that are not typically approved by Medicare.
AT THE LAW OFFICES OF JOUMANA KAYROUZ, SETTLING YOUR CASE IS NEVER JUST ABOUT THE MONEY—BUT IT IS ALWAYS ABOUT THE FUTURE. IT TAKES GREAT CARE, WISDOM AND PATIENCE TO MASTER THE MANY FACTORS INVOLVED IN SETTLING YOUR LOVED ONE’S CASE. AND WE ARE ALWAYS MINDFUL ABOUT CREATING SOLUTIONS WITH THE GREATEST SCOPE AND FLEXIBILITY FOR THE KNOWN AND UNKNOWN.