Once you obtain your personal injury settlement from an insurance company, you might think that the process is over. But the truth is, the legal journey does not end with you securing compensation to pay for medical bills and property repairs.
You must reimburse all the parties you owe before moving on with your life. An example is when a Medicare insured person suffers injuries from a car accident.
Medicare is the federal health program that insures individuals aged over 65 and younger people with disabilities ore terminal illness.
If you are injured and you are a Medicare recipient, Medicare will cover the cost of your medical treatment. But if you successfully claim your personal injury settlement, then you must repay Medicare for any payment it initially made as a result of the injury.
Read on to understand how correlation between Medicare and personal injury settlement.
Medicare and Personal Injury Settlement – Can Medicare Take My Settlement?
Can Medicare take my settlement? Yes, it can! Medicare imposes a lien on the compensation from personal injury settlements.
A lien is a legal claim on a property to settle a debt. Medicare imposes a compulsory lien on all settlements received from personal injury claims. The lien is meant to protect the legal right of Medicare to reimbursement.
The lien applies to all parties involved in the personal injury case as long as they are under Medicare. If you fail to reimburse Medicare the money owed, you may lose the whole settlement amount.
Notably, the Medicare lien only applies to medical expenses linked to the personal injury claim. So, making sure that all charges on the lien are accurate is important.
So, how much will Medicare take from my settlement? Well, the amount you pay largely depends on how much Medicare paid for your settlement and also the total amount you received in settlement.
Basically, if your total payout is $5000 or less, Medicare offers a fixed percentage option. The fixed percentage option is 25% of the total amount you received in full and final settlement of your personal injury settlement Medicaid reimbursement claim.
If Medicare spent more on your medical treatment than your total settlement amount, then the one-third reduction rule comes into play.
Unfortunately, unlike cases that involve private health insurance, Medicare does not offer you any flexibility to negotiate away or negotiate down its lien amount. But if either you or your lawyer has doubts about Medicare’s making a fair settlement, you can appeal the amount being asked of you.
What to Do After Resolving Your Case
If Medicare paid for medical costs for a personal injury, it requires you to report any settlement resulting from your personal injury claim.
You are supposed to report the personal injury settlement within 60 days. Should you fail to report timely, you might incur substantial fines—going for as high as $1,000 per day.
The first thing that you should do is to notify the Benefits Coordination and Recovery Center (BCRC) of the resolution of your personal injury claim.
The purpose of BCRC is to ensure Medicare gets reimbursed for payments made to another entity. It is the same body that you report to when you get into an accident and sustain injuries that call for medical treatment.
When the report is ready, you will receive notice of the Medicare lien amount within a 120-day period. The notice also contains a list of treatments and charges for which Medicare claims to be reimbursed.
Next, liaise with your attorney to review those treatments and charges for accuracy. The reason for reviewing the charges is that Medicare is only entitled to reimbursements associated with medical treatment for your personal injury claims.
For example, you might have received medical treatment for a fractured bone obtained after a motor vehicle collision. And during this treatment period, you also caught flu and visited your primary doctor for treatment.
In that case, you are not required to reimburse Medicare for payments related to the flu treatment. The Medicare lien will only apply to the medical treatment received for the bone fracture.
Medicare then sends you a formal demand letter after removing any unrelated medical expenses from the list of charges. The final payment demand is usually sent within a 30-day window.
You or your attorney are legally bound to pay Medicare the reimbursement amount that the medical lien covers, or pursue an appeal if you believe the lien is erroneous.
No Reduction of the Lien
Legally, Medicare cannot accept a lowered negotiated sum once it has removed all other unrelated medical costs, except in a few rare circumstances. The reason for no negotiation is to ensure that Medicare recovers the total amount it paid for injury-related medical care.
The rule is maintained even in cases where the settlement amount is less than the Medicare lien. But when this happens, a general rule known as “no reduction of the lien” applies. But remember, this exception only applies if you have an attorney.
Medicare honors this general rule by reducing the lien by a third of the total amount. In so doing, Medicare acknowledges that the cumulative recovery received from a settlement has already been reduced by the fees owed to the attorney, which you pay as a contingency fee, or almost one-third of your settlement amount.
Bringing in a Lawyer
In any personal injury claim, you need an attorney to represent you to increase your chances for winning. Your need for an attorney doesn’t end after winning and receiving your personal injury settlement though.
Here are some instances you need to bring in a lawyer during personal injury settlement reimbursement:
Potential Requirement for a Medicare Set Aside
There are instances where, as the injured party, you will need to consider the cost of future treatment resulting from accident-related injuries.
This could happen when you receive a settlement as a Medicare beneficiary and your physician determines that your injury will call for care in the future, and Medicare is billed for it.
In such cases, federal law requires taking account of Medicare’s interest prior to disbursing the settlement funds. That may call for creating a Medicare Set Aside (MSA) for paying for medical care that Medicare would otherwise have to cater to.
If you see a possibility of requiring future medical care, then the best course of action is to bring in an experienced attorney. The attorney will guide you in the process and determine what should be taken into account for the future interest of Medicare.
Negotiating a Waiver for Your Medicare Liens
Medicare is not the only party you are paying using your personal injury settlement award. You also have the contingency fee for the attorney who helped win the settlement.
Besides that, you might have suffered a loss of income because of the injuries sustained. So, you need to have a significant amount for yourself until you’re fit enough to go back to work.
So, how do you make sure you don’t spend it all on liens and contingency fees? The answer is by applying for a Medicare lien waiver.
Unfortunately, you have no bargaining power with the lienholder if you decide to handle the issue yourself. That’s why you need a lawyer to negotiate your personal injury settlement and Medicaid reimbursement on your behalf.
An experienced personal injury attorney is knowledgeable in how to deal with Medicaid liens, so he will advocate for you and take you through the complex Medicare lien waiver process, speeding up the chances of a positive outcome.
Without a lawyer, you might end up on the short end of the stick once all the liens have been paid.
Conclusion
Medicare has set stringent rules to make sure that its recipients reimburse it with proceeds from personal injury settlements.
Whenever Medicare pays medical bills arising from injury cases, it creates a lien to reimburse itself from your personal injury settlement award.
You are supposed to file a report informing Medicare that you received the settlement. Failure to do so may attract additional fines.
For you to be on the right side of the law, consider hiring an experienced car accident lawyer to guide you through the process.
