Medicare is a federal health insurance program for people who are 65 or older or who qualify for Social Security Disability (SSD) benefits. It is considered a “secondary” payer, meaning it will only be used after all other avenues of payment (such as private insurance plans) have been exhausted. However, many people use Medicare as their sole health insurance plan.
If you are insured by Medicare and have been injured in an accident, Medicare will make “conditional payments” while your claim is pending with the liability insurance company, and it must be reimbursed for those payments out of the settlement proceeds. In other words, Medicare has an automatic lien on your settlement proceeds, and its lien takes precedence over all other liens (such as a chiropractor’s lien). Unlike healthcare providers’ liens, the Medicare lien has very little room for negotiation.
Understanding Medicare’s role in your personal injury claim can be complicated, so we highly recommend speaking with a Durham personal injury lawyer about your case. This article gives a brief overview of what happens when Medicare is involved in your personal injury claim.
Rights and Responsibilities Letter
Within a few weeks from the time they are notified of your claim, Medicare will send you a “rights and responsibilities” letter, which notifies you that a Medicare Secondary Payer (MSP) recovery case has been established in the Medicare system. This letter will outline what to expect from the process and how to contact Medicare about your claim. The letter will be accompanied by a cover sheet, which you or your attorney should use every time you correspond with Medicare because it contains a bar code that is specific to your case. Once you receive the rights and responsibilities letter, your attorney will send Medicare a letter of representation.
Final Lien Notice
Once your case settles, you have 60 days to report the settlement to Medicare. It’s important to report within that 60 days to avoid high fines. Medicare will then send a final lien notice that includes all the charges Medicare believes it should be reimbursed for. You and your attorney should review the list carefully, as you should only be reimbursing Medicare for medical care related to your injury. For example, if your shoulder was injured in the accident and required surgery, and then a week after the surgery you visited your primary care physician for an unrelated illness, then you owe Medicare reimbursement for the shoulder surgery but not for the PCP visit.
Final Payment Demand
Once all unrelated charges have been removed, Medicare will send a final payment demand within approximately 30 days. At this point, you or your attorney are legally responsible for paying Medicare, unless you believe the lien amount is in error and would like your attorney to file an appeal. You must pay the full lien amount even if the settlement amount is less than the Medicare lien. In this case, if you have an attorney, Medicare will usually reduce their lien by one-third, in recognition that you are already paying one-third of your settlement money to your attorney.
How to Reduce a Medicare Lien Amount
You may be wondering if there are any other ways to get Medicare to reduce their lien amount. Unfortunately, unlike healthcare providers’ liens, there is little room for negotiation with Medicare liens. The intent of the law is for Medicare to be reimbursed fully for the medical care it paid for.
There are a couple of exceptions, however. If your claim settles for $5,000 or less, Medicare offers a fixed percentage option that allows you to pay 25 percent of your settlement amount as a full and final reimbursement. This option is helpful if you don’t have an attorney. The other exception occurs if your total settlement is $300 or less and you have not yet received a demand letter from Medicare. In this rare situation, you will not owe Medicare anything.
Contact Kreger Brodish LLP for More About Medicare and Your Settlement
If you have been injured in an accident and Medicare is making conditional payments for your medical care, it’s important that you speak to an experienced personal injury attorney right away. The attorneys at Kreger Brodish LLP can help you understand the process and maximize your financial recovery. Call us today for your free consultation.
