Injured victims who are receiving Medicare often wonder about the extent of Medicare’s rights to retain that portion of the proceeds of a settlement or judgment which represents the sums that Medicare paid out for their treatment expenses. Is it even worth putting in the effort to go through the claims process when Medicare has this legal right to reimbursement? The answer is yes, it is almost always worth your effort: because Medicare is bound by federal regulations that affect, and limit to some extent, its recovery from the victim’s settlement or judgment.
Here, the California personal injury lawyers at GJEL Accident Attorneys discuss some important things that Medicare recipients need to know about Medicare’s relationship to personal injury claims, and your legal rights and obligations.
Medicare’s Potential Recovery From Your Settlement or Verdict
Under federal regulations, Medicare has a right to recover sums it pays out for your medical bills, when you subsequently recover damages in a personal injury claim for those injuries. But this right is subject to rules that include consideration of fairness in allocating the proceeds.
In a typical situation, the most that Medicare receives is 50 percent of the net payment, after attorney’s fees and litigation costs. For example, if you have a medical bill paid by Medicare of $300,000; and, after going through the legal process, you are able to recover only $100,000, (perhaps due to limited availability of insurance coverage of the responsible person), Medicare typically is willing to accept one half of your net recovery, after attorney’s fees and costs.
Net recovery versus total recovery is a very important distinction. Medicare’s recovery, under such circumstances, is typically adjusted for the legal fees that will be taken out of your settlement or verdict. In the above example, assume that your attorney charges a third, or $33,333. That would leave $66,667. In its regulatory calculations that take into account considerations of fairness, Medicare would typically accept an agreement to receive $33,333.50 (50%), in which case the remaining $33,333.50 would go to you, tax free.
Reimbursing Medicare, and The Right to Appeal
To ascertain exactly how much you may potentially owe to Medicare in reimbursement, you should know that Medicare will transmit notification of the amount it has paid on your behalf. You should receive this information within 120 days of the date that you reported your claim; and you should have access to periodic updates from Medicare where treatment continues.
Your lawyer has access to this information as well; and he or she can generally obtain, at the end of the case, some reduction in Medicare’s claim, in exchange for an agreement to promptly pay Medicare when your claim is resolved. The extent of that reduction depends on a number of factors that are set out in federal regulations. Occasionally a claimant and Medicare cannot reach a compromise as to Medicare’s recovery, in which case the injured person can seek review of the dispute by an appeals process. Your lawyer will be able to help you fight for the best possible result, in light of the applicable federal law.