Medicare Provision in Settlement Agreement

Medicare Provision in Settlement Agreement: What You Need to Know

If you’re involved in a legal dispute that is set to be resolved through a settlement agreement, it’s important to understand the Medicare provision that is often included in such agreements. This provision, known as the Medicare Secondary Payer (MSP) provision, aims to prevent Medicare from paying for medical expenses that should be covered by another party, such as an insurance company or the liable party in a personal injury case.

In essence, the MSP provision requires the party responsible for making the settlement payment to identify and reimburse Medicare for any medical expenses that Medicare has paid for related to the injury or illness in question. This reimbursement is often referred to as a “Medicare Set-Aside” (MSA) and is calculated based on the estimated cost of future medical expenses.

It’s important to note that the MSP provision applies only to settlements where the injured party is eligible for Medicare or will become eligible for Medicare within 30 months of the settlement. If the injured party is not eligible for Medicare and has no imminent plans to become eligible, the MSP provision does not apply.

Additionally, the MSP provision only applies to cases where the settlement amount exceeds a certain threshold. As of 2021, this threshold is $750 for liability settlements and $250,000 for workers’ compensation settlements. If the settlement amount falls below these thresholds, the MSP provision does not apply.

If the MSP provision does apply to your settlement, it’s important to work with an experienced attorney or settlement consultant who can help you navigate the complex rules and regulations surrounding MSAs. They can help you determine the appropriate amount to set aside for future medical expenses and ensure that you are in compliance with all Medicare reporting requirements.

In summary, if you are involved in a settlement agreement that involves Medicare eligibility and medical expenses, it’s critical to understand the Medicare Secondary Payer provision and its requirements. By working with a knowledgeable consultant or attorney, you can ensure that your settlement complies with all applicable regulations and you can avoid potential legal issues down the line.