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Do I Have to Repay Medicare from my Personal Injury Settlement?

This is question that we get all the time.   In short, the answer is a very resounding “Yes, you do have to pay back Medicare for medical expenses associated with a personal injury claim.”  In fact, the Medicare lien is perhaps the most critical lien to address in the settlement of a personal injury claim.

The penalties for not paying back the Medicare lien are significant.  There are penalties for both the Medicare beneficiary as well as the attorney and insurance companies for failure to properly address a Medicare lien.  As such, among the first questions most personal injury attorneys will ask is whether or not you received any medical treatment through Medicare.

Many potential personal injury clients are not too pleased to hear that they must repay Medicare.  Some simply do not believe it.  Others still take the position that they will not repay Medicare since they believe these benefits have been earned over a lifetime.  Unfortunately, Medicare does not view it that way and can be very aggressive in both enforcing the lien as well as imposing penalties.

Failure to properly pay or account for the lien can result in $1000/day penalties.  As such, few attorneys would be willing to distribute personal injury funds without properly accounting for Medicare.  Even for those that might take that risk, the insurance companies generally will not allow it.  The Medicare reporting and accounting burdens on the insurance companies are enormous.   Consequently, many insurers will either refuse to issue a check or hold the total amount of the potential Medicare lien until such time that it has been addressed.

So you may now wonder, “How does one address the Medicare lien?”  Sometimes, it is no trivial task.  It can be quite difficult to work through the lien negotiation process with Medicare.  At times, it may take months to get a response on the amount Medicare claims as a lien.  Along with the stated lien, Medicare will provide detailed billing histories associated with the claimed lien.  Once you have the amount and billing history, the negotiation of the lien will begin.

There are a number of possible avenues for negotiating down the Medicare lien.  First, and most common, the billing statements are over inclusive.  In other words, the billing statement and history will often have medical expenses completely unrelated to the accident.   You are not responsible for repaying medical expenses unrelated to the accident.

Next, like most insurance and/or medical liens, Medicare will often agree to negotiate down its lien.  It is pretty standard for medical providers or insurers, including Medicare to reduce the lien by percentage equal to attorney fees. For instance, if you are paying your attorney a 1/3 attorney fee, then medical providers/insurers will reduce their liens by 1/3.

Once you do finally get the attention of Medicare, which some may find quite frustrating, Medicare is often significantly more reasonable that a private medical providers and insurers in the negotiation of liens.  The fact is that without the personal injury settlement, Medicare would be stuck with the entire bill.  As such, it is often possible to get a greater reduction in the lien than the standard reduction for attorney fees.

So finally, the question is what should you do in case of a personal injury settlement and medical treatment through Medicare?  There are a few simple things you need to do: 1) Let your attorney know that you received treatment through Medicare, 2) Be prepared to repay Medicare, 3) Be alert to billing items unrelated to your accident, and perhaps most importantly, 4) Start early in addressing these issues.

If you start early, the rest will fall into place and there will be much room for negotiation.  If you start too late, such as after settlement and worst case after distribution of funds, there is little room for negotiation and significant potential for penalties.

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