Medicare recipients who have personal injury claims need to be aware that, by law, they will have to repay Medicare for any payments made as a result of the injury from any judgment or settlement they may receive. Medicare is entitled to be reimbursed for everything that it has paid stemming from a personal injury claim and, in order to protect its right to reimbursement, Medicare has a lien on any compensation that the insured receives from a personal injury claim. (A lien gives a person or entity a claim to someone else's property, securing a debt owed to the lienholder.) And unlike cases involving private health insurers, Medicare offers little to no wiggle room to negotiate away or negotiate down its lien amount.
So You Have Resolved Your Personal Injury Claim, What Next?
Medicare requires its insureds to report the settlement or judgment resulting from any and all personal injury claims within 60 days. Failure to do so can result in a fine that can be as high as $1,000.00 per day.
While there are multiple ways to report the settlement of, or judgment for, a personal injury claim, the easiest way is to visit the Medicare website (http://cms.hhs.gov) and report the settlement or judgment electronically. Once the report is made, the insured will receive notice of the amount of the Medicare lien within a period of 120 days or less. This notice will contain a list of all treatments and charges for which Medicare believes that it is entitled to be reimbursed. This list of treatment and charges should be reviewed for accuracy because Medicare is entitled to reimbursement only for medical treatment that is related to the personal injury claim. So, for instance, if you are involved in a motor vehicle collision, suffer a broken leg, and incur medical treatment from January 1 through March 31, but you see your primary care physician in February because of the flu, your treatment with your primary care physician for the flu is not reimbursable. The Medicare lien applies only to medical treatment that is directly related to the personal injury claim for your broken leg.
Unfortunately, once any unrelated medical expenses are removed, federal law prevents Medicare from accepting a lowered negotiated amount or sum in all but the rarest of situations. So the expectation is that Medicare will be able to recover all payments that are made. Finally, once any unrelated medical expenses are removed, Medicare will then send a final payment demand within approximately 30 days. Unfortunately, this process, as described above, is a burdensome endeavor; however, in any personal injury action where Medicare has paid the first medical expense, the smart move is to report and pay the claim for reimbursement.
What Else Do You Need to Know About Medicare?
The most important principle to remember is that if Medicare pays, a settlement or award needs to be reported and reimbursement made, or there can certainly be unwanted repercussions. The process (as noted above) is not a simple one, but help is coming. Congress has passed what is referred to as the "SMART Act" which will reduce the time Medicare has to respond to settlement and judgment reporting, offer alternative means for injured parties to provide the required information, and make the process more efficient. However, until the SMART Act is fully implemented, we will all continue to suffer with using the antiquated reporting methods.
Some final points to remember and consider relating to Medicare and personal injury settlements:
Claims Resolved for $5,000.00 or Less
In cases that settle or result in a judgment for $5,000.00 or less, Medicare has a fixed percentage option. This is particularly helpful if you are trying to settle a case without the assistance of an attorney. In these cases, regardless of the amount of the total Medicare lien, Medicare will accept 25% of the total amount received by you in full and final resolution of its claim for reimbursement.
Does an Admission of Liability Matter?
In most instances when a personal injury claim is resolved by a negotiated settlement, the insurance company offers the injured party a Release and Settlement Agreement which, when signed, will terminate the claim. This document likely states that the insurance company (on behalf of its insured) in no way admits fault or liability. While at first glance it may seem reasonable that this denial of liability creates an argument against the requirement that you reimburse Medicare (if there was no liability for causing you injury, how can the payment be a result of the injury), this does NOT alleviate the reporting and reimbursement requirements.
Who Will Ever Know?
Do not be surprised to learn that if you fail to report your settlement or judgment, there is still a good chance that Medicare will find out anyway. Medicare flags payments it makes for certain medical treatments that often result from injuries that generate personal injury claims. So if you break a bone in a car accident and seek medical treatment, you will likely receive correspondence from Medicare asking if you have suffered an injury on account of another's negligence. You must truthfully respond to such requests and any others from Medicare, because failure to do so may jeopardize your eligibility and may even be a criminal offense.
Recently, Medicare has become increasingly more stringent in making sure that its insureds reimburse it out of any personal injury settlements or judgments. This is certainly an unwanted and inconvenient obligation (after all, didn't you pay premiums for years in order to be entitled to collect Medicare?); however, failure to report may result in an even more unpleasant alternative.
© 2018 Ward and Smith, P.A.
This article is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney.