If you’re a plaintiff in a personal injury lawsuit, and you get Medicare or expect to get it soon, then you need to be aware of your obligations to Medicare.
Under the Medicare Secondary Payer Act (MSPA), Medicare doesn’t pay for healthcare where someone else has primary responsibility, such as a defendant in a lawsuit. For example, if you get into a car accident and need healthcare, and the other diver’s insurer is supposed to pay for your healthcare, Medicare will not pay for healthcare for which the insurer should pay.
The MSPA is complicated and confusing – probably too complicated to explain in a short blog post. However, it’s extremely important that you understand your MSPA obligation, because if you don’t fulfill it, it’s possible that you could lose your Medicare benefits. If Medicare decides that the defendant paid you damages (money) that was meant to cover your healthcare, and instead you spent it on something else, Medicare may refuse to pay for further healthcare for you until you spend the money from the defendant on healthcare. If the money’s already spent, you might be stuck with no money, no Medicare, and no way to get Medicare.
The best way to fulfill the MSPA obligation is with a Medicare set-aside arrangement. This is a legal instrument through which a portion of your settlement is set aside to pay for your healthcare. The disadvantage is that once money is put into a Medicare set-aside arrangement, it can’t be used for anything other than healthcare. For this reason, may people would rather not have a Medicare set-aside arrangement. That is their decision, but in doing so, they risk losing their Medicare benefits and ending up with no way to pay for needed healthcare.
The Centers for Medicare and Medicaid Services (CMS), which administers Medicare, hasn’t yet issued rules for Medicare set-aside arrangements in personal injury / liability cases, so some lawyers and plaintiffs ignore MSPA obligations. In my view, that’s a mistake that puts both the lawyer and plaintiff at risk. At the very least, plaintiffs should be informed about how Medicare set-asides work, obligations under the MSPA, and the potential consequences of not fulfilling your obligations. Plaintiffs should at least be able to make an informed decision about whether they want a Medicare set-aside.
At FriedmanLaw we do MSPA consulting on personal injury cases, advise clients whether a Medicare set-aside is necessary and help clients create Medicare set-asides where appropriate. Call or email us today for information on how the MSPA applies to your case.