By law, Medicare will claim a lien against any personal injury settlement for medical expenses paid for treatment related to those injuries. In addition, Medicare will claim a lien on future medical expenses related to future treatment for those injuries. The lien on future medical expenses is the Medicare Set-Aside.
It is extremely important to begin working with Medicare on the lien issues well in advance of any settlement. Medicare is often quite reasonable in addressing those liens. This is important for a number of reasons, not the least of which is the fact that Medicare often greatly overstates its liens, often including expenses related to medical conditions unrelated to or which pre-existed the accident.
The same holds true for future medical expenses. Medicare will often assert a blanket lien over the entire settlement amount. In cases where significant future medical expense is required, the future medical expense could actually exceed the amount of the settlement.
This is not that uncommon in cases of very serious injuries where significant and sometimes permanent medical treatment is required. However, there are numerous potential areas for negotiation with Medicare‘s over inclusive liens. For instance, in cases of serious personal injury, there are often very significant recoverable damages unrelated to medical expenses, either past of future. Medicare is not entitled to claim liens against settlement amounts that are unrelated to medical expenses paid or to be paid by Medicare.
Likewise, in cases involving serious personal injury, the actual settlement is often well below the value of the claim. This comes up in cases of underinsured drivers, underinsured property owners, damages caps in medical malpractice claims, tort claims caps, and so on. In these cases the medical expenses, past and future, may actually exceed the recovery.
In those cases, there are strong arguments that Medicare must take a pro rata reduction in its liens in proportion to the settlement amount and the actual value of the case. It would be patently unfair to allow Medicare to reap the benefits of an injured person‘s efforts to recover, while simply standing on the sideline awaiting payment in full on its claimed liens.
There will often be other grounds for negotiation of Medicare liens including the future set-asides beyond these two examples. Again, Medicare is often quite reasonable so long as the negotiations occur in advance of the final settlement, and most certainly before distribution of any funds. On the other hand, failure to address them in advance can be disastrous with huge potential fines to the injured person, his or her attorneys and even the insurance company.
In short, though Medicare does have rights to lien a personal injury settlement for set-asides for future medical treatment and expense, there are protections for an injured person. These are equitable in nature and Medicare more often than not will work out a fair and equitable outcome on its liens if properly approached to do so. If they are not approached, then naturally there may be a very different outcome.
If you have suffered personal injuries in an accident and there is a potential settlement, it is very important that you contact an attorney experienced in handling medical liens, including Medicare and Medicaid.
Related Reading:
Eleventh Circuit Addresses Medicare‘s Responsbilities in Lien Negotiation
Medicare/Medicaid Lien Reduction for Attorney Fees
10th Circuit Addresses Medicaid Lien Reduction in Personal Injury Settlements