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Personal injury settlements are often beset by reimbursement claims or liens from other parties that may have contributed to the payment of medical costs such as third party insurers or Medicaid. Medicaid is a federal and state run program for low income individuals who receive medical care at no or low cost.
Medicaid differs from Medicare, which is offered to those over 65, in that there are income eligibility requirements. For those who receive a settlement or a money verdict in a personal injury claim, a portion of the medical payments by Medicaid are subject to reimbursement out of the personal injury proceeds. Also, unless you are careful, receipt of your settlement funds could jeopardize your eligibility to continue receiving Medicaid benefits. For these reasons, consult Medicaid lawyer Patricia Bloom-McDonald should you have an injury claim and are receiving Medicaid or other public benefits.
Can Medicaid Receive Total Reimbursement?
A Medicaid lien represents no less than a major headache in many instances to an injury plaintiff and Medicaid lawyer who has just settled an injury claim. Medicaid will assert a lien against any recovery for its payment of medical costs less attorneys’ fees in most cases but its recovery or reimbursement from a personal injury settlement or verdict is limited.
A 2006 US Supreme decision in Arkansas Department of Health and Social Services vs. Ahlborn attempted to clarify Medicaid’s right to a lien on personal injury proceeds, especially in the vast number of cases that are settled for less than its actual value. Over 90% of all injury claims are settled before trial and for less than what it may be worth because of proof issues, a plaintiff’s comparative liability or simply a desire to end litigation. The Ahlborn court ruled that federal law limits the states’ right to pursue funds recovered by a Medicaid recipient since by accepting federal funds to participate in Medicaid, the states must bear the remaining costs. Though there appears to be no explicit statutory power by the states to assert any lien on a personal injury claim, the Court found a limited right in other statutes allowing recovery from an injury settlement for medical costs.
Though Medicaid may have a right to a lien on the settlement, Alhborn restricts that amount to that portion of the settlement or verdict representing the medical expenses. Also, if the claim was settled for less than its true value when compared to similar cases and other factors, then the Medicaid lien is reduced by that degree. For example, if a case was settled for one-third of its value, then the Medicaid lien is similarly reduced.
The court also said that an Ahlborn hearing may be held to determine the claim’s true value or the parties may stipulate to it. If a hearing is held, the plaintiff may introduce medical testimony and other evidence as to the true value of all the damages in the case, including the plaintiff’s injuries, as compared to other similar claims to support its contention that the case was worth more than the settlement. The state agency administering Medicaid may challenge the presented data at the hearing to assert the settlement was a fair and true value for this type of claim.
An Injury Settlement May Jeopardize Eligibility
An important consideration for Medicaid recipients is their continuing eligibility if they settle a personal injury claim. Continuing to receive other public benefits such as SNAP and Section 8 housing may also be adversely affected. Because the Medicaid program is means-dependent, if you receive more than $2200 per month in income (subject to inflation each year) or have assets of $2000 to $3000, you may become ineligible for Medicaid. There are exceptions to what assets are counted including a residence and a motor vehicle valued up to a certain amount.
Should you receive a sizeable settlement, your Medicaid lawyer should establish a Special Needs Trust for you or a pooled trust, otherwise you could be denied continued coverage. In either trust situation, a professional trustee can invest the funds and distribute them when needed so as not jeopardize a recipient’s continued participation in Medicaid. Actually, the attorney’s failure to recommend such a trust in these cases could expose the attorney to professional malpractice.
Consult Attorney Patricia Bloom-McDonald
Patricia Bloom-McDonald is an elder law attorney in Massachusetts who has been assisting and representing clients in estate and trust planning and other elder law matters for over twenty years. Do not jeopardize your eligibility to receive Medicaid if you are involved in a personal injury claim. Call her today for a free initial 30-minute consultation.