When you’ve been injured in a Florida car accident, getting a fair settlement can already feel overwhelming. But when Medicare or Medicaid has covered some of your medical bills, things can get even more complicated. These government programs have strict rules about getting reimbursed from any settlement you receive, and failing to address these setoffs properly can cause serious legal and financial headaches.
Understanding how Medicare and Medicaid setoffs work is important for any accident victim, attorney, or insurance adjuster. Let me break it down in simple terms so you can understand what you can expect from each and how to protect your settlement.
Medicare and Medicaid: What Is the Difference?
First, let me explain what these programs are and how they apply to an accident case.
Medicare is a health insurance program provided by the federal government and is generally available to people 65 years and older, and to individuals with certain disabilities. It covers inpatient hospital care, outpatient care, and some prescription drugs.
Medicaid is a state and federally funded program that delivers healthcare to low-income individuals and families. The Medicaid program in Florida covers many medical services related to car accident injuries, among other things.
If you are awarded damages for your injuries, Medicare and Medicaid have a statutory right to be reimbursed for any medical expenses related to the accident that they have paid. This is called a setoff or lien, and it plays a major role in how much of the money awarded in a settlement actually ends up in your pocket.
How Do Medicare and Medicaid Setoffs Work?
If Medicare or Medicaid pays accident-related medical expenses, they have a lien on your personal injury settlement for reimbursement. Here is how this generally works:
Medicare Liens
The Medicare Secondary Payer Act makes Medicare a secondary payer when another party should pay for your medical bills, such as the insurance company of the at-fault driver. If Medicare has paid for your treatment, they will send a conditional payment letter stating the costs to which they become entitled for reimbursement.
- Medicare Reporting Requirements: Attorneys and insurance companies report settlements to Medicare in consideration of compliance.
- Recovery Process: Once your settlement is complete, Medicare will send a demand letter with the amount owed. This has to be paid before you receive the remaining settlement funds.
- Possible Reductions: Medicare may reduce its lien based on attorney fees and costs, which may lower the amount you owe.
Medicaid Liens
Florida law also grants Medicaid a right to recover accident-related medical expenses from any settlement. However, Medicaid’s lien is limited to that portion of the settlement which is identified as past medical expenses.
- Priority Claim: Medicaid is given first priority in claiming settlement funds over other creditors.
- Settlement Allocation Matters: If the lion’s share of your settlement is allocated to pain and suffering and not medical expenses, the Medicaid claim may be reduced.
- Medicaid Lien Challenge: If Medicaid’s lien appears to be too high, Florida law provides that plaintiffs can contest such an amount.
Florida Laws Controlling Setoffs
There are several different laws that bear on how Medicare and Medicaid setoffs work in Florida injury cases:
- Florida Statutes § 409.910
- Limits Medicaid’s recovery to the extent a settlement has been allocated to medical expenses
- Grants injured parties right to dispute lien amounts when unfair
- Florida Collateral Source Rule
- Prevents defendants from reducing their liability by pointing out that Medicare or Medicaid paid some of your bills.
- However, it doesn’t eliminate your obligation to reimburse these programs.
- Relevant Case Law
- Florida courts have consistently ruled that Medicaid’s recovery is limited to past medical expenses, not future damages or pain and suffering.
- Medicare’s right to reimbursement has been reinforced in federal cases, making compliance essential.
How to Handle Medicare and Medicaid Setoffs in a Settlement
These setoffs are not always easy to handle, but the following steps will help in protecting your settlement:
- Determine If Benefits Were Used
- At an early stage in your case, determine whether Medicare or Medicaid paid any of your medical bills related to the accident.
- Notify Medicare or Medicaid
- If they paid for your treatment, you – or your attorney – must contact the appropriate agency regarding your pending case.
- Request a Conditional Payment Letter
- Medicare will, in turn, provide a breakdown of what they have paid on your behalf. Medicaid’s lien amount will be determined based on the details of your settlement.
- Review and Contest the Lien Amount
- Mistakes do occur! At times, Medicare and Medicaid inflate their claims for reimbursement. Go through their claims and contest any charges that are unrelated.
- Negotiate a Reduction
- Medicare might reduce their lien when legal fees are taken out. Medicaid’s lien can be negotiated, too – especially when much of the settlement is placed to non-medical damages.
- Get the Proper Allocation of Your Settlement
- In your settlement, structure it with your attorney to adequately allocate the damages between medical expenses, lost wages, and pain and suffering in order to lessen the amount to be reimbursed.
- Determine the Lien Before Payment
- Medicare and Medicaid need to be reimbursed prior to receiving your final settlement funds. Failure to do so may result in penalties, including double damages under the Medicare Secondary Payer Act.
Common Challenges and Pitfalls
Medicare and Medicaid setoffs can be tricky to handle. The following are some common issues that accident victims and attorneys face:
- Lien Amount Disputes: The initial claims often contain unrelated medical expenses that need to be disputed. It is crucial to go through all medical billing summaries and EOB’s to ensure all claimed bills are related to your injuries.
- Slowness to Process: Government agencies are not the most efficient in the world, and waiting on lien resolution can be holding up your settlement check.
- Attorneys have strict legal requirements for how liens must be handled, or they could face legal consequences. This may delay your settlement disbursement. We have no choice.
- Non-payment to Medicare or Medicaid is punished with fines and penalties, sometimes double damages. That is why your attorney needs to be sure the liens are satisfied.
Conclusion: Safeguarding Your Settlement
Setoffs by Medicare and Medicaid are an important, yet frustrating, part of the settlement process in car accidents in Florida. Mastery of the rules, with the help of an accomplished attorney, may ease the process and maximize net recovery.
If you have been injured in an accident, call Jaime “Mr. 786Abogado” Suarez today to Get You Paid!