When an injured person (the plaintiff) receives a settlement or judgment, certain medical payments first need to be made.
Prior to any disbursement in funds to the plaintiff something called a “lien resolution for past medical bills” happens. During this phase payments made by Medicare/Medicaid and/or private insurance are reimbursed, if they have a right to reimbursement.
After this there will be a Medicare-Set Aside carve out of the Settlement or Judgment for anticipated medical care into the future. The Medicare-Set Aside is necessary for both the plaintiff and Medicare since it serves to protect both Medicare’s interest, but also protect the plaintiff’s right to participate in the program going forward.
This is an important step to note. The settlement essentially puts aside the money for government programs which will later be used to pay for health care costs. It’s important to ensure that nothing happens which might disqualify someone from receiving those government benefits, because they’ve already been paid for out of the settlement.
Once the Centers for Medicare and Medicaid (CMS) agree on the Medicare Set-Aside they sign off on it.
A Special Needs Trust then needs to be set up for the plaintiff, since a lump sum payment directly to the plaintiff may interfere with certain government benefits that are based on means testing such as Medicaid and Social Security Disability Payments.
A Special Needs Trust that complies with individual state requirements has to be created to allow for future support for the plaintiff without interfering with their participation in already earned governmental benefits.
A failure of the plaintiff’s attorney to consider a Special Needs Trust as part of the settlement process is a source of attorney liability if the plaintiff subsequently loses already earned benefits. In other words, the attorney is responsible for ensuring the plaintiff receives this trust and does not lose their benefits.
In Summary:
- A judgment or settlement is made
- Reimbursement for prior medical care is made to private insurance, Medicare or Medicaid as required
- An amount of the settlement is set aside for future medical care
- A special needs trust is set up to prevent a lump sum payment from interfering with government earned benefits
- The attorney is responsible for ensuring the patient’s interests are protected through correct management of the disbursement of funds
As a Life Care Planner Dr. Vigna manages all elements of a legal judgment or settlement. He is available to discuss your case.
