Frank C. Kilcoyne, CSSC

Future Medical Care

One of the most important questions to consider “post settlement” is whether the injured claimant will need future treatment related to the injury and, if so, who is going to pay for it.

We have discussed at length the current “holding pattern” that the issue of Medicare Secondary Payer compliance for liability cases seems to be in but it’s worth considering the situation afresh each time out.

Even if you are of the opinion that there is no current legal requirement to take any action whatsoever in deference to a potential future Medicare interest, if you are dealing with a substantial recovery, modest steps could provide a dose of insurance against future controversy.

Probably the most robust inoculation against future problems would be to preemptively do in a liability case what is clearly mandated for workers’ compensation cases: actually set funds aside to pay for (otherwise) Medicare-covered future treatment. The key here is to remember not to overfund – you only want to set aside for care that is causally related to the injury giving rise to the claim. Good resources exist to follow this path, thanks to trailblazing done by the workers’ compensation industry.

What about remaining future medical care costs? While these may not be causally related to the injury at hand, they are most certainly a real aspect of the claimant’s life. We already know that if a plaintiff like this is receiving Medicare or has a reasonable expectation of receiving Medicare in the near future, it follows that a good portion of their non-causally-related medical care will also be funded by Medicare. Why not develop a plan that funds the care covered in the MSA and a plan to fund the cost of the plaintiff’s Medicare premiums?

In reviewing the Medicare plans available in New York, I find the most comprehensive coverage is provided by what's called a Medicare “Advantage Plan”, sometimes called "Part C". This includes both Part A (hospital insurance) and Part B (medical insurance). Advantage Plans are provided by private insurance companies approved by Medicare. Each company providing a Medicare Advantage Plan provides the standard menu of Medicare benefits, but also implements their own pricing policies which can be easily compared. The plan providing the widest-ranging coverage is “Plan F” and, in New York currently, that plan averages $310 per month.

Staying with our prior case, we have an injured plaintiff who is already receiving or is expected to be receiving Medicare soon and you have decided to head off potential problems by incorporating a Medicare set-aside arrangement into the terms of settlement. Why not further provide for the injured claimant’s future medical needs by providing a guaranteed tax-free income of $310 per month to fund a broad-based Medicare Advantage Plan? With the MSA and additional insurance coverage funded, you are likely now covering the most important “post-settlement issue” many claimants face.

But what if the plaintiff is receiving means-tested public benefits such as SSI, Medicaid, Medicaid Waiver, SNAP (formerly “food stamps”), Section 8 Housing, or Group Home help? Could funding a Medicare set-aside and Plan F coverage inadvertently disqualify a claimant’s eligibility for these programs? Yes, indeed it could! And that’s not a mistake anyone wants to make.

Both Medicare and means-tested public benefit programs offer claimants substantial benefits. The programs themselves can also have potential financial interests in how settlement funds are distributed though and you have to work your way through them carefully.

It helps to be clear on what it takes to qualify for each. Medicare is a federally-administered program that guarantees access to health insurance for Americans aged 65 and older and younger people with qualifying disabilities. Means-tested public benefit programs take a slightly different tack related to their rules for qualification: you have to have a low income and nearly no assets to qualify for and remain in these programs.

Taking possession of any significant settlement money as outlined above would disqualify the claimant from most means-tested programs. But a solution exists for this problem too: claimants are permitted to set up a Special Needs Trust (“SNT”) for the purpose of receiving, holding, and distributing settlement funds which will not disqualify them from means-tested public benefit programs – as long as when they die, any remaining money in the trust is used to reimburse those programs for prior care received.

How then do you ensure that needy claimants hold onto valuable coverage while properly protecting the programs’ legitimate interests in settlement? You recognize and coordinate the coverages and rules of the programs, you consider establishing a Special Needs Trust to protect and preserve the claimant’s eligibility, and you pay the MSA and Medicare premiums from within the SNT.

This dual eligibility scenario for Medicare and Medicaid is just one of the many issues you need to develop an awareness of when handling settlements involving future medical care.

Other hurdles still exist, like sorting through the various conflicts of law between the MSP, Medicare policies, and each state’s individual Medicaid statutes and recovery rights. Charting a safe path through these kinds of situations is an essential aspect of our company’s services.

Do you have a case with intricate issues regarding future medical care? Want to feel confident you have worked through these complexities thoughtfully? Call Frank C. Kilcoyne, CSSC at 800-544-5533. I am here to help.