Medicare Set-Aside

Medicare and Settlements

When resolving a personal injury, medical malpractice, or worker compensation claim you must protect Medicare’s rights if you receive Medicare now or reasonably should expect to receive it before long. Misunderstanding or ignoring Medicare obligations can hurt both you and the lawyer handling your claim.

The Medicare Secondary Payer Act prohibits Medicare from paying for care that is the responsibility of a person who causes an accident or commits medical malpractice, an insurer, or a worker compensation carrier. Where the person at fault or insurer refuses to pay, Medicare may pay for care on condition that Medicare will be repaid if a settlement or other recovery ensues.

The Medicare Secondary Payer Act also requires your recovery rather than Medicare to fund future accident or medical malpractice related care (unless an insurer or worker compensation carrier agrees to pay for it). A Medicare set-aside trust is Medicare’s preferred means to meet this obligation.

Medicare Set-Aside Trust (MSA)

What is an MSA and why would I need it?

A Medicare set-aside trust is a vehicle that satisfies your obligations to Medicare after your personal injury, medical malpractice, or worker compensation case settles or goes to verdict. While you can spend your recovery as you choose, unless you place the mandated share of your recovery in a Medicare set-aside trust earmarked for future care, you may face a nasty surprise. Medicare can refuse to pay for accident or medical malpractice related care even though you may have nothing left from your recovery to fund essential medical care.

How will FriedmanLaw create my Medicare set-aside trust?

To establish a Medicare set-aside trust, we first determine how much of your recovery must fund care necessitated by your accident or medical malpractice in order to satisfy technical Medicare guidelines. Next we prepare a vehicle to segregate the set-aside amount for case related care. Finally, we can recommend professional administrators who know how to manage an MSA as required by Medicare.

In our experience, a professionally drawn and administered Medicare set-aside trust actually may lead to lower future care costs than if you do it yourself. In addition, this helps us design your MSA to seamlessly integrate with Medicare so you can go about your life without worrying about who will pay for your future care.

Who may need an MSA?

Any plaintiff who is a Medicare beneficiary or will be within the next two and a half years and has a personal injury, medical malpractice, or worker compensation claim is a strong candidate for a Medicare set-aside trust. Even if you don’t currently receive Medicare, you will fall within the two and a half year time frame if you are age 62.5 or older, or may qualify for Social Security Disability (SSD).

How can I avoid the need for an MSA if my care is complete?

You need not place a recovery in a Medicare set-aside trust if you should not need future care for the accident or medical malpractice giving rise to the recovery. However, this exception applies only if qualified medical providers provide certifications in strict compliance with Medicare guidelines. We can work with your providers to prepare certifications in appropriate situations.

Repaying Medicare Conditional Payment from Settlement or Award

As noted above, the Medicare Secondary Payer Act requires a settlement or other recovery to repay Medicare for accident or medical malpractice occasioned care. If Medicare is not repaid, the Centers for Medicare and Medicaid Services (CMS) can charge additional amounts and go after personal assets of you and your lawyer.

CMS’s secondary payer portal allows participating lawyers to determine repayment amounts online. That amount is binding on CMS for a limited time, which allows the parties to negotiate a settlement with certainty.

A word of caution: Do not ignore Medicare Secondary Payer Act claims. Liability insurers must report settlements to Medicare, and failure to repay Medicare conditional payments can draw sharp penalties. The Medicare Secondary Payer Act permits Medicare to collect from anyone who touches a recovery including the claimant, and insurers and attorneys who disburse settlement proceeds without first resolving Medicare claims, and lien.

FriedmanLaw works with claimants and attorneys to deal with Medicaid liens, including reviewing Medicaid’s claims for relatedness and negotiating a lower lien amount where appropriate.