This article has been published in "The Advocate", a monthly publication of the Arizona Association for Justice/Arizona Trial Lawyers Association, September 2010 issue,
@2010 by Steven J. Bruzonsky, Esq.
MEDICARE LIENS: FUTURE ACCIDENT-RELATED
MEDICAL EXENSES SETTLEMENT ADDENDUM
(Please see my several previous "Liens Corner" articles concerning Medicare Set-Asides in the March & April 2009 and February 2010 issues.)
Once your client’s injury claim is about to settle, is there some possibility that Medicare may pay for any of your client’s future accident-related medical care? If so, then how are you going to handle this to adequately protect Medicare’s interest? One option could be doing a set-aside, regardless of whether Medicare will approve the set-aside. But in many cases a set-aside is just not practical for various reasons. In such cases, I have prepared an Addendum for the client to read and sign at settlement. All you need to do is fill in the last paragraph for the specifics of your case. Following is the Addendum:
Future Accident-Related Medical Expenses In Consideration of Medicare Requirements
The Federal Medicare statute and regulations require that any other insurance for your future accident-related injuries and medical care (including the proceeds of your personal injury and any medical payments or no fault settlements) pays primary (or prior) to Medicare paying.
For personal injury cases which also include worker’s compensation claims, Medicare encourages the submission of a formal Set-Aside (a fund created as part of the worker’s compensation settlement which is used to pay future accident and work related medical expenses, instead of Medicare paying such medical expenses), provided that the personal injury settlement is greater than $25,000.00, OR if the injured party reasonably expects Medicare enrollment within thirty months from the settlement date and the the anticipated total settlement amount for future medical expenses and disability/lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000. However, at this time Medicare has no requirement that a formal Set-Aside be done for personal injury claims not involving worker’s compensation claims, and there is no guarantee that Medicare would even review such a formal Set-Aside if it were submitted to Medicare.
The bottom line: You have a substantial value personal injury claim. You may or will require future accident-related medical care. You may be presently on Medicare, or in the future you may become eligible for Medicare (whether by turning age 65, or prior to age 65 obtaining Social Security Disability and becoming eligible for Medicare). You are then required to consider Medicare’s interest that the other insurance discussed above is primary. A formal Set-Aside could be done regardless of whether its approved by Medicare, but unless the personal injury settlement is very large with clear award for substantial future medicals, a formal Set-Aside is not recommended since there can be substantial expense to set up and administer a formal Set-Aside. In most cases, if the personal injury award included future medical expenses, it might make more sense for you, on your own, to simply set up a special bank account for this purpose. Only you would be responsible for this special bank account, as our responsibility as your personal injury attorney is over once we have settled your injury claim and disbursed all settlement funds ensuring payment of all then existing liens against your injury settlement.
Were you awarded future medical expenses as part of your personal injury settlement?
Did the settlement terms specifically identify an award of future medical expenses? Have your doctors stated that in their opinion, specific future medical care and expense will be necessary due to the accident, as opposed to your pre-existing and non-accident medical conditions? Have your doctors stated that you might possibly incur future accident-related medical expense, but they are unable to state that you probably (greater than 50% chance) will require future accident-related medical expenses? What if your injury claim is worth far more than the available settlement funds, whether due to "low" policy limits, comparative negligence, or other reasons.
All of these questions make it very difficult for both us, as well as the Medicare bureaucracy, to set forth standards and guidelines to determine when an injury settlement,with no related worker’s compensation claim, provides funds for payment of future accident-related medical expenses. This is probably why Medicare currently doesn’t require formal Set-Asides for personal injury claims not involving worker’s compensation. Worker’s compensation settlements and awards routinely include award for future supportive work related medical care, and thus its quite easy for Medicare to approve formal Set-Asides based on worker’s compensation awards.
So if you have a personal injury settlement not involving worker’s compensation, should you worry about setting aside funds for payment of future accident-related medical expenses? Could Medicare come after you in the future if they pay future accident-related medical expenses and they then determine that you should have paid those medical expenses from the proceeds of your personal injury claim?
The best advise that we can give you at this time is that if in your case, accident-related future medical costs have been or can be easily estimated, or if the settlement agreement or judgment specify an award for future medical costs, then you might want to consider, on your own, setting up a fund to pay for these future medical expenses. A bank account with a debit card to pay medical expenses could be used. Or a formal Set-Aside could be done using one of the financial companies that specialize in this, but this should only be for large awards of future medical expenses. Of course, if you have health insurance other than Medicare, let that health insurance pay instead.
Regarding your own personal injury settlement:
(Please insert language specific for your case here. Following are two examples from recent case on which I assisted in lien resolution.)
Example 1: We claimed accident-related medical expenses of $105,600, which includes consideration for right foot/ankle surgery done 1-15-2009 to repair accident-related Lisfranc fracture dislocation, metatarsal fractures 1-5, right cuboid fracture and lateral cuniform fracture, and follow up physical therapy; and short term medical care for an accident-related exacerbation of your pre-existing C5-6 cervical diskectomy and fusion. Your Orthopedic Surgeon has stated that you MIGHT need some future medical care for your accident-related foot/ankle fractures and injuries, including right foot hardware removal, shoe modification, physical therapy, injections in joint, and if osteoarthritis progresses too much possibly further surgery. Your personal injury settlement did not specify any specific amounts of the settlement for specific future medical care or procedures. As discussed above, there is the possibility that Medicare could refuse to pay future accident-related medical benefits, on the basis that your accident settlement is primary for this. You may want to consider, on your own, setting up a fund to pay for these possible future medical expenses. A bank account with a debit card to pay medical expenses could be used. Of course, since you currently have health insurance, not Medicare, use your private health insurance as much and as long as you can do so.
Example 2: Regarding your own personal injury settlement: You have had past surgery and are having further surgery. Your past medical bills alone way exceed the available total settlement proceeds of only $175,000.00 ($100,000 liability, $50,000 Underinsured Motorist and $25,000 Medical Payments – all policy limits). Your settlement proceeds, after payment of attorney’s fees and costs, liens, and medical copays/deductibles/expenses not covered by your health insurance, are about $________. The settlements do not consider or stipulate ongoing and future medical care and costs because your injuries and loss of income, past and future, and permanent impairment alone justify policy limits with hardly any submission even of past medical bills. My personal opinion (since there is really no guidance from Medicare on this issue) is that your personal injury settlement does not include compensation for future medical care and expenses and thus your accident injury settlements should not be primary for purposes of Medicare in the future. Though please understand that I cannot 100% guarantee this for the reasons discussed above.