Can settling a personal injury claim cost me my health insurance, Medicaid, SSI, SSDI or Medicare benefits?
Can settling a personal injury claim cost me my health insurance, Medicaid, SSI, SSDI or Medicare benefits?
- How to lose your benefits and get little or no money from your settlement by not dealing with your health carrier appropriately…
Yes, you can lose your health benefits by settling your personal injury case by yourself incorrectly. When most people think about settling their personal injury claim, they are usually concerned about how much money they will be receiving from the party-at-fault, known as the tortfeasor. The client knows that they have to pay their lawyer and other costs, and pay any unpaid medical bills, and many think they get to keep all the rest of the money. Boy can they be wrong, and pay dearly for it.
What many clients do not realize is that the private or government health insurer will almost always come back and demand their money they paid for your accident-related treatment back. This is called subrogation or reimbursement. They want to be reimbursed.
- Private health insurance...
Private health insurance contracts, like the one you may have through work, almost always require you to repay them for medical bills they pay when some third party is at fault, which is the case with many car accidents. Someone else is at fault, and so the private health insurer wants that portion of the settlement they believe they are entitled to. On one level it seems fair.
- State and federal benefits…
Government health insurance plans like Medicaid, Workers Compensation and Medicare have statutory repayment language that requires you to repay them from the settlement for past medical bills they paid resulting from the settlement. This happens at the time you settle your accident claim with the party-at-fault. If you don’t repay the government, they may try to drop you and Medicare may press criminal charges against you. I bet you did not know it is a crime to not repay Medicare for medical payments they make on your car accident case.
Anyways, since you have to repay these providers or they will drop you, it makes sense to know when and how much the law requires you to repay. The law may help you out here.
- Not enough auto insurance…
For private health insurers, state and federal law affects when and how much you have to repay. For instance, you might not have to repay your health insurance company/ government insurance if you do not receive full recovery for your injuries. This usually happens when there is not enough liability coverage. When you are not "made whole”, a lawyer may be able to reduce or eliminate the amount you have to repay. Medicaid, Workers Compensation and Medicare always deny they must follow the make whole doctrine, but have no legal authority for this position. I believe they are all wrong and the law is clear that you don’t have to repay them if you are not made whole, but this requires suing them and getting a judge to agree. In any event, they all have procedures to request reductions in specific circumstances.
- You are partly-at-fault…
If you are partly at fault for the accident, you may not have to repay the entire amount of medical bills paid. After all, the health insurer usually only has the right to repayment if a third party is at fault, and if you are partly at fault, then this is not totally the case. Remember, if you fall at home, usually no third party is to blame, so your health carrier has to pay and not get repaid from any third party.
- Medicaid reductions of repayment…
Medicaid has to take half of what is left after attorney fees and expenses as a maximum. This is in the Medicaid statute. I bet nobody is going to tell you that. Most of the time they split what is left after the attorney is paid. However, they do not honor the make whole doctrine, and if you are crippled in an accident and only get $25,000 they may try to take their larger portion, when they may be entitled to nothing. See make whole doctrine above or Medicaid Pro Rata below.
- Medicaid Pro Rata: pennies-on-the-dollar repayment…
The US Supreme Court stated in the Ahborne case that Medicaid only gets their pro rata share of settlements. This means, as a practical and simplified matter, that they can’t hog the entire settlement for themselves, and if you only collect 10 cents on the dollar for your injury, Medicaid should only get 10% of their accident-related medical care payments reimbursed. For example if your case is worth one million dollars and you collect only $100,000, then you received ten percent of your case value so Medicaid should get only ten percent of the money they paid in accident-related medical care back at settlement time.
- Non-accident related care…
Many times insurers try to get back a lot more money then they are entitled to. They send a list of every medical provider you have seen for years to the auto carrier and expect everyone to assume they are all accident related, and they ask for reimbursement. Sometimes this includes things such as mammogram appointments, which almost never has nothing to do with the accident. If you are not careful, you may end up paying back a lot more than you are required to repay, which means a lot less money in your pocket. Sometimes, the health insurer wants back a lot more money than the medical bills you submit to the auto insurance company. Who is going to fight them for you to reduce the amount of money you have to repay? You?
- But the auto insurance adjuster will take care of this...
Really, lets be honest. In my opinion, they don’t really care if you pay back too much to Medicare, Medicaid, BWC, Anthem or Summacare. Why would they? They are not going to fight tooth and nail with Medicaid or Anthem to reduce your subrogation amount so you have to repay less and keep more in your pocket. The auto insurance adjuster or any liability insurance adjuster does not work for you. Remember that. Don’t just leave it up to them. It could cost you dearly in the wallet. A lawyer will negotiate these reductions, and if necessary, sue your health insurer, Medicaid or Medicare to reduce the amount they are legally entitled to receive. Are you going to sue the federal government by yourself? I don’t think so.
In these tough financial times, everyone is feeling the pinch, even the government. They are actively and aggressively pursuing their right to be repaid in liability cases, such as car and truck accidents, and you need to be protected from them. Don’t turn your settlement over to your health insurance company or the government if you don’t have to, or risk losing your benefits.
- Worker’s Compensation and Medicare want my entire settlement for future medical bills?
More and more people understand that at time of settlement of their personal injury claim, they have to deal with private health insurance, Medicaid, Worker’s Compensation, and Medicare for past medical bills paid by them, but they do not realize that more and more these governmental entities want to take even a bigger bite out of the apple of your settlement to pay for future accident related care. Your lawyer knows when you need a set aside trust to protect your Medicare benefits, and it is not that often as of today. If needed, he or she can help reduce the amount you have to set aside for the state or local government to get off your back. If you don’t protect their future interest in your case, you can lose your benefits. Don’t lose your benefits or be bullied by the auto insurance company into setting aside most of your settlement into some set aside trust you may not even be required to have.
- Do I really need a Medicare set-aside trust? Probably not.
As an example, if Medicare will not be paying the future accident related medical bills, then there is no burden shift for these bills to Medicare, and of course no set-aside is needed. So if you have health insurance, why give up your settlement for no reason. You cannot trust the adjuster to protect your settlement from Medicare. They usually represent the person who hurt you in the first place.
Also, if the care you would need in the future is not covered and paid for by Medicare, you would not need a Medicare set-aside trust. There is no future burden shift to Medicare because Medicare won’t be paying for the type of future accident related care you will need.
If there is no indication that you will be on Medicare (or SSDI) in the next few years, then why have a set-aside trust. My point is, don’t just blindly follow the advice of some government employee or some insurance adjuster who just wants your file off of his or her desk. Let a lawyer follow the law and only set aside money when needed, and the least required to fulfill your obligation to Medicare.
Currently, there are no federal rules concerning set-aside trusts for Medicare. The law only says that you and your lawyer must make a good faith effort to protect Medicare’s future interest. What the heck does that mean? These are just a few examples of how you might be talked into giving up your settlement to Medicare for absolutely no reason. Perhaps when the federal government gets around to promulgated rules regarding Medicare set-aside rules in liability settlements, there may be more burdens on you and your lawyer. This is the case with Medicare set-asides in workers compensation cases. The law is pretty clear there.
- Getting too much money can also cost you Medicaid or SSI benefits, at least for a while…
Another way to lose, at least temporarily, your state or federal benefits is to get too much money in your settlement. Imagine, you negotiate a great settlement, deal with repaying your health insurance company, Medicaid, workers compensation or Medicare, show no future medical bill money must be set aside, you cash your check, and find out a few months later that you lost your Medicaid or SSI benefits for months. The reason this happens is because need based benefits require that you don’t have a lot of money laying around, otherwise you would not have qualified for the benefits in the first place. Think of it this way, if you won the lotto you would be kicked off need based government assistance. You make too much money and don't qualify. Same with personal injury settlements. When you get the money from the settlement, you are in a sense “too rich” to get the need-based benefits, and your benefits disappear, at least for a while. A lawyer can help you deal with this, specially when the client is seriously injured, by various methods, including setting up a special needs trust.
You may ask why I did not talk about SSDI benefits being affected by a liability settlement. This is because they are not affected. They are not need based. You pay into SSDI over time to get the benefit. Since it is not need based, you cannot lose the benefit just because you get a lot of money in your settlement. However, being on SSDI may trigger the need for a Medicare set aside trust for future accident related care. See above. It gets pretty complicated, doesn't it?
You can see how complicated this issue of repaying past and future medical payments to your private and government health insurers, and many unsuspecting people repay way too much money, lose a lot of money that should be in their pockets, or don’t repay and lose their benefits without ever knowing why. Don’t take chances with your private health insurance, BWC, SSI, Medicaid and Medicare benefits, let a competent personal injury lawyer handle this for you. Most of the time you keep your benefits and put a lot more money in your pocket by not repaying money you are not required by law to repay. Don't leave it in the hands of the auto insurance adjuster who works for the person who hit you most of the time. Don’t let your health insurance company make you a victim a second time. Remember, it is not how much you get that matters, it is how much you keep that matters in the end.