For individuals receiving a personal injury settlement and who are on Medicare, or who have a reasonable expectation of going on Medicare within the next 30 months, such individuals should at least consider placing a portion of their settlement in a Medicare Set Aside trust.
Under current Medicare law, when a third party is liable to a Medicare beneficiary (or soon-to-be Medicare beneficiary), it is possible some portion of any settlement or judgment received from the liable third party will go at least in part to paying for injuries the third party caused to the Medicare beneficiary for which Medicare would otherwise pay. However, this can vary based on the size of the settlement and the nature and severity of the injuries.
The key concept is that the liable party cannot shift their liability to pay for future treatment of such injuries over to Medicare (most often referred to as CMS, the Centers for Medicare and Medicaid Services, the federal agency that administers Medicare).
A Medicare Set Aside (“MSA”) trust is an arrangement in which the settling injured party takes some portion of her settlement and places it in a separate account, for use to pay her future medical costs related to the injury, rather than permit the medical provider to bill Medicare. This ensures CMS is protected as a “secondary payor” to the third party who actually caused the injury.
At present, federal law and regulations regarding MSAs in liability cases is limited. That may soon change. At minimum, it is nonetheless wise for individuals receiving a personal injury settlement or judgment (including medical malpractice cases) to at least reasonably consider whether some portion of the settlement represents compensation for future medicals for which Medicare would otherwise pay. This helps guard the injured individual against the possibility of Medicare reviewing the settlement at some point in the future and determining she should have used some portion of her settlement money to pay for future treatment related to her injury, rather than the bill being sent to CMS. Without such reasonable consideration, an individual could potentially risk their future Medicare benefits.
Solem, Harris & McKinley, P.C. carefully tracks the most current developments regarding MSAs, and can provide assistance to both the injured party and their personal injury counsel in considering Medicare’s interest in a settlement or judgment. This includes an analysis of whether a settlement represents any compensation for future medical damages, taking into account other categories of damage such as past medical costs, economic losses, and pain and suffering. We can help advise whether an MSA is appropriate, and if so, we can prepare the MSA document and advise on the administration of the MSA account.