Protecting Medicare Eligibility When Settling Personal Injury or Worker Comp Claim

Posted on: January 22nd, 2012 by Lawrence A. Friedman

Will settling your personal injury or worker compensation claim cost you your Medicare? It shouldn’t, but it easily could if you and your personal injury lawyer don’t protect Medicare’s rights.

Generally, Medicare coverage is secondary to others who may have responsibility for your health care costs. Therefore, when settling nearly all personal injury and worker compensation claims, Medicare expects Medicare participants to repay Medicare’s pre-settlement expenditures for accident related care and spend damages that compensate for post-accident care costs incurred after settlement (“Future Medicals) on Future Medicals rather than submit claims for Future Medicals to Medicare. You must protect Medicare’s secondary payer interests if you are on Medicare when your claim settles or reasonably should expect to get Medicare within the 30 months following settlement for reasons such as having reached age 62.5, applied for Social Security Disability benefits (even if denied by an appeal is anticipated), or contracted end stage renal disease

Why should you care? Failing to protect Medicare’s rights can forfeit your own Medicare! What if you need costly surgery due to your accident, Medicare says you must pay for Future Medicals, but you’ve already spent your entire settlement? To make matters worse, Medicare may require you to spend more on Future Medicals going forward than they would if you’d made a good faith effort to protect Medicare’s secondary payer rights when settling your case.

What should you do? Medicare prefers you set aside Future Medicals damages in a Medicare Set-aside Arrangement (“MSA”). An MSA is a share of your damages that is calculated to cover Future Medicals for the rest of your life expectancy and is set aside solely to pay for Future Medicals. The appropriate amount to place in an MSA is based on Medicare guidelines and your post-accident medical records. However, an MSA satisfies your obligations to Medicare only if limited to paying for Future Medicals at rates acceptable to Medicare. Professional administrators can help meet these requirements. If the MSA is funded and administered in accordance with Medicare requirements, Medicare will pay for any Future Medicals that arise after the MSA is exhausted. If your actual Future Medicals turn out to be less than anticipated, the excess can pass to your beneficiaries.

FriedmanLaw can work with you and your personal injury or worker compensation lawyers to design a cost effective MSA that avoids interruption of your Medicare coverage. Contact us today at 908-704-1900.

Further information on this and other subjects is available throughout To subscribe to our frequent blog updates, click on “Subscribe to this Blog” in the Meta box to the left and then click on “subscribe to this feed.”

As this website provides general information and isn’t tailored to your particular situation, it doesn’t constitute legal advice and may not take into account rules and exceptions that affect you. Although updated from time to time, this website may not take account of recent legal developments or differences in laws from state to state. For safety sake, obtain individual legal advice before you act! You assume all risk of acting on information contained in this website. This website doesn’t constitute legal advice, and no attorney-client relationship exists unless FriedmanLaw and you execute a written engagement agreement. Please contact us at 908-704-1900 to discuss engaging FriedmanLaw to help resolve your legal concerns.
Homepage photo: Cows grazing at Meadowbrook Farm, Bernardsville, NJ by Siddharth Mallya. October 23, 2012.
Interior photo: Somerset hills pastoral scene by Lawrence Friedman.