When you receive injuries due to someone else’s action, inaction, or negligence, you typically have a right to compensation. If your injuries require medical treatment that Medicaid covers, it also has a right to seek reimbursement from your settlement.
How much Medicaid will take from your settlement for a personal injury varies based on several factors, which we discuss below. You’ll learn how Medicaid liens and reimbursement work and what you can do to protect your settlement and your best interests.
As you pursue litigation, you may need help from professionals, such as an attorney. You may also need help making financial ends meet while you wait for a settlement. That’s where solutions like pre-settlement funding can help you cover immediate expenses.
Key Points
- Medicaid liens allow Medicaid to seek reimbursement for medical costs associated with a third party’s negligence.
- The reimbursement process varies based on state.
- You may be able to protect your settlement and negotiate liens to some degree.
- Case-specific considerations can impact reimbursement.
Understanding Medicaid Liens and Reimbursement
Medicaid is a federal and state program that provides low- or no-cost health insurance to low-income beneficiaries.[1] If you become injured as a Medicaid recipient and seek medical care using Medicaid to pay, you may have to repay the cost of care out of your settlement.
States may impose Medicaid liens on settlements.[2] Federal and state regulations govern Medicaid’s right to reimbursement from settlement awards, so the process will vary from state to state.[2]
What Is a Medicaid Lien?
Medicaid may cover healthcare costs for low-income people or people with qualifying disabilities, but it does not take responsibility for injuries caused by another person’s negligence. States have a duty to collect reimbursement for the costs of medical care in such cases.[3]
A Medicaid lien grants a state the right to recoup the costs of a beneficiary’s care using their property or assets. By placing a Medicaid lien on a settlement, the state ensures it receives its share of the payout.[4]
Individuals receiving Medicaid who may receive a personal injury settlement are often required to notify Medicaid of the possibility of a payout.[4]
Federal and State Regulations
Federal regulations grant Medicaid the right to seek reimbursement from personal injury settlements. However, the Supreme Court ruled that Medicaid liens can only apply to the allocated funds for medical expenses.[5] Other aspects of the payout, such as lost wages or pain and suffering, cannot be claimed by Medicaid.
State laws may alter how much Medicaid may claim and how they can claim it. If you’re a current Medicaid recipient and in the process of suing for damages, it’s important to discuss what to expect and how your state works with your attorney. There may be requirements, such as reporting the settlement to Medicaid, that you need to be aware of.
Calculating the Medicaid Reimbursement Amount
The exact amount that must be reimbursed to Medicaid varies, and some states may have regulations that differ from others. Generally speaking, the following may be considered for reimbursement:
- The amount of a settlement dedicated to covering medical costs
- The cost of medical care directly resulting from the personal injury a settlement reimburses[6]
- The potential cost of future care related to the personal injury[7]
Determining Eligible Medical Expenses
Medicaid considers cases where a beneficiary requires medical care due to injury caused by the action, inaction, or negligence of another person to be casualty/tort cases. The state’s Medicaid agency has a duty to recover the full amount spent on an injured party’s casualty/tort care.[8]
Only eligible medical expenses may be counted in the lien. This encompasses all care related to helping the injured party recover from the incident leading to the casualty/tort case.[8]
Accounting for Procurement Costs
Procurement costs, such as attorney fees and case costs, may factor into the final reimbursement amount.[8] More specifically, state Medicaid agencies may choose to allow the full value of litigation costs and attorney fees to come from the settlement first and then seek reimbursement, or they may choose to pay a proportionate share of attorney fees based on the share of award it takes.[8]
Litigation can be expensive, so these fees can build up quickly. In some cases, plaintiffs may qualify for pre-settlement funding to assist with upfront costs. This funding is repaid out of a settlement if an award is granted.
State-Specific Calculation Methods
Every state will have its own calculation method to determine a reimbursement amount.[8] This means you must consider the state-specific approach based on the jurisdiction handling your case. An attorney can be especially useful in navigating this process.
Negotiating and Reducing Medicaid Liens
Medicaid agencies cannot negotiate with the beneficiary or third parties to reduce Medicaid liens unless the federal government has received its share. However, because some Medicaid agencies worry that beneficiaries won’t cooperate if they won’t receive at least some of their settlement, they may work with the beneficiary to reduce the reimbursement amount.[8]
One way to do so is by considering the cost-effectiveness of pursuing the full amount of Medicaid expenditures. This can lead to Medicaid pursuing a partial sum or no recovery efforts at all. A state’s Medicaid agency may also compromise on its share of the recovery if the federal government receives its fair share.[8]
Providing Evidence of Procurement Costs
Procurement costs factor into the final figure for both your settlement and Medicaid liens.[9] Providing proof of procurement can potentially reduce the reimbursement amount, especially if they demonstrate that it’s unlikely that the amount remaining will not cover the cost of care provided by Medicaid.[9]
Demonstrating Unreasonable Payments
If you believe that Medicaid has listed costs unrelated to your case, you may be able to reduce how much Medicaid can claim. Unrelated medical payments, such as covering other conditions or treatments that did not stem from your injury, do not count against your settlement for reimbursement.[7]
Enlisting Legal Representation
Having an attorney experienced in negotiating and reducing Medicaid liens can also help. Your attorney may know the most likely way to get the lien reduced in your state and how to review any paperwork regarding payments made for your care to ensure everything is accurate.
Protecting Your Settlement from Medicaid Claims
Certain actions can help you protect your settlement from Medicaid liens. This is essential to maximizing the portion you retain. Methods include:
- Setting up a Medicare set-aside
- Ensuring your settlement is structured correctly
- Seeking professional guidance from someone experienced in Medicaid liens on personal settlements
Establishing a Medicare Set-Aside
A Medicare set-aside is a trust designed to cover future medical expenses related to your injury. It’s commonly seen in workers’ compensation cases when the beneficiary is on Medicare or expected to be on Medicare.[10] This can help protect your Medicare or Medicaid interests if you’re worried you will lose your Medicaid if you get a settlement.
Structuring the Settlement Properly
A proper settlement structure can also help you minimize the impact of Medicaid liens. Since you have to report a settlement to Medicaid, it’s possible that receiving a settlement outright in cash can threaten your eligibility. However, an attorney may be able to help you set up a trust or another vehicle for your settlement to minimize the impact it has. For example, a special needs trust or a Medicaid asset protection trust (MAPT) may shelter the funds from counting as income.[11][12]
Seeking Professional Guidance
A professional can help structure settlements correctly to protect your interests. If you expect to receive a settlement for a personal injury case, it’s highly recommended that you seek out attorney or settlement planner advice before proceeding.
Special Considerations for Different Case Types
Beyond state and federal regulations impacting Medicaid lien resolution and reimbursement, the type of case or claim can also impact the outcome. For example, a workers’ compensation claim is treated differently than a personal injury or wrongful death claim.[13]
Likewise, the timeline to settle each case can vary greatly. In the meantime, options exist to support plaintiffs during litigation.
Personal Injury Settlements
Personal injury cases, which may include car accidents, dog bites, or slip and falls on someone else’s property due to their negligence, often result in hefty medical fees. If you’re worried about whether Medicaid can take your car accident settlement or other personal injury settlement, you’re on the right track.
If you are on Medicaid at the time of injury, Medicaid likely covers the cost of your care. If so, they have a vested interest in your settlement, as they aren’t responsible for medical problems arising due to a third party.
Workers’ Compensation Claims
Medicaid is not meant to cover workers’ compensation injury cases. Workers’ compensation is considered a third party and must pay all care related to the injury.[14]
However, if you receive a workers’ compensation settlement, it may impact your eligibility for Medicaid if it pushes you over asset limits.
Wrongful Death Awards
As previously stated, Medicaid can only claim the part of a settlement related to medical costs incurred by the beneficiary related to the case. A Medicaid agency generally can’t collect the part of a settlement covering wrongful death damages.[14]
How USClaims Can Help
Getting caught up in legal proceedings can cause serious stress, especially as costs accrue. Not everyone can wait long enough for a settlement or award. That’s where USClaims comes in. We offer financial assistance before, during, and after legal proceedings.
Pre-settlement funding works by providing you with access to a portion of your projected settlement to use during the case. You only pay it back if you win a settlement or award. If you lose your case, you don’t pay anything. Customers rave about our excellent service and trust us to help them in a pinch.
If you’re stuck in a lawsuit and need help making ends meet, you may qualify for pre-settlement funding. Contact USClaims to learn if you qualify for funding.
The availability of pre-settlement funding varies by state. Contact USClaims for more information.
FAQs
Does Medicaid Have to Be Reimbursed from a Settlement?
Technically, no. If the costs of pursuing reimbursement exceed the recovered funds, Medicaid may opt to skip recovery. However, in most cases, Medicaid will pursue reimbursement whenever it’s effective.
Can Medicaid Take My Entire Settlement?
It depends on how your settlement is structured. Medicaid may only take funds designated to cover the cost of medical care and cannot take other funds, such as pain and suffering or lost wages.
What if I Don’t Report My Settlement to Medicaid?
You must report changes in circumstances, including receiving a settlement, to Medicaid. Not doing so can result in you losing eligibility for Medicaid.
Sources
- “Medicaid Home | Medicaid.gov.” Centers for Medicare & Medicaid Services, www.medicaid.gov/.
- “Medicaid Liens.” Office of the Assistant Secretary for Planning and Evaluation (ASPE), aspe.hhs.gov/reports/medicaid-liens-0. Apr 2005.
- “Recovery of Federal Funds through Judgments/Settlements.” U.S. Department of Health and Human Services Office of the Inspector General, oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000231.asp.
- “What Does the Ahlborn Decision Really Mean?” Cincinnati Law Library News, lawlibrary.hamiltoncountyohio.gov/wp-content/uploads/2015/01/07february.pdf. Feb 2007.
- “Medicaid Lien Resolution Fundamentals.” Legal News by Jason D. Lazarus, Esq., jasondlazarusesq.legalexaminer.com/art-of-settlement/medicaid-lien-resolution-fundamentals-2. 22 Sept 2022.
- “Supreme Court Report: Gallardo v. Marstiller, 20-1263.” National Association of Attorneys General, www.naag.org/attorney-general-journal/supreme-court-report-gallardo-v-marstiller-20-1263/. 15 June 2022.
- “Gallardo v. Marstiller.” U.S. Supreme Court, https://www.supremecourt.gov/opinions/21pdf/20-1263_g2bh.pdf. 2022.
- “Coordination of Benefits and Third Party Liability (COB/TPL) in Medicaid.” Medicaid, https://www.medicaid.gov/medicaid/eligibility/downloads/cob-tpl-handbook.pdf. 2020.
- “Reimbursing Medicare.” Centers for Medicare & Medicaid Services (CMS), www.cms.gov/medicare/coordination-benefits-recovery/overview/reimbursing.
- “WCMSA Self-Administration.” Centers for Medicare & Medicaid Services (CMS), www.cms.gov/medicare/coordination-benefits-recovery/workers-comp-set-aside-arrangements/self-administration.
- “Special Needs Trusts and Personal Injury Settlements.” Special Needs Alliance, www.specialneedsalliance.org/special-needs-101/special-needs-trusts-and-personal-injury-settlements/.
- “How Medicaid Planning Trusts Protect Assets and Homes from Estate Recovery.” American Council on Aging, www.medicaidplanningassistance.org/asset-protection-trusts/. 1 Feb 2024.
- “How Is a Workers’ Compensation Claim Different From a Personal Injury Claim?” Petro Cohen, petrocohen.com/blog/how-is-a-workers-compensation-claim-different-from-a-personal-injury-claim. 15 June 2023.
- “Coordination of Benefits & Third Party Liability.” Medicaid, www.medicaid.gov/medicaid/eligibility/coordination-of-benefits-third-party-liability/index.html.