Frank C. Kilcoyne, CSSC

The Affordable Care Act From Both Sides of the "V."

I took my first pass at the Affordable Care Act (ACA) back in May of this year and it was a little too early to know what value it might bring to the claims resolution process. In continuing my research on the subject, I have sought out arguments - both for and against - using the ACA as a primary mechanism for funding future medical expenses.

The argument for using the ACA to fund future medical expenses asserts that, under the Act, individuals with pre-existing conditions must be covered without regard to medical history. Furthermore, the ACA mandates that individuals purchase health insurance or pay a penalty. Therefore, whereas in the past an injured plaintiff would most likely be denied health insurance coverage, now not only can that person secure coverage, but they will be penalized if they fail to do so. Some believe that these guaranteed-issue and individual mandate requirements of the ACA will allow injured plaintiffs to address their health care needs through simple purchase of their own health insurance plan rather than through direct compensation for an itemized list of accident-related health care needs.

Proponents of this argument further believe that compensation awards should be reduced to simply the cost of obtaining the necessary insurance, (in States that do not enforce the common law collateral source rule)(1) , so long as the insurer in that State does not maintain a legal right of subrogation.

Folks who argue against using the ACA to fund future medical expenses say that nothing in the ACA provides that all components of a plaintiff's life care plan will be completely (or even partially) covered by health insurance in the future. Even the cited maximum projected out-of-pocket medical costs ($2,000 for single coverage) do not necessarily represent a cap on future medical expenses. Many of the items identified in professionally-prepared life care plans are not required to be covered by ACA plans and/or are not subject to the maximum annual out-of-pocket limit.

For example, ACA plans are not required to count expenses such as copayments, deductibles, coinsurance payments, and out-of-network payments toward the maximum limit. Additionally, the ACA says that health insurers must cover only certain itemized "essential health benefits", which do not include commonly needed services such as long-term facility care and in-home skilled nursing care.(2)

Getting a bit further down into the technical weeds, opponents argue that collateral source setoffs expose the plaintiff to the risk of suffering a double reduction, since nothing contained in the ACA affects a health insurance company's subrogation interest. They hold that advocates of this approach erroneously ignore insurers' subrogation interests and fail to consider the collateral source payers' rights. Both sides acknowledge that some states have expressly eliminated subrogation and reimbursement rights when damages are reduced for collateral sources.

Current law in New York provides that the court may reduce the amount of damages awarded by amounts the plaintiff is entitled to receive from collateral sources.(3) New York has also limited an insurer’s right of subrogation while other subrogation rights are guaranteed by statute.(4) Thus, in New York, a defendant should be entitled to a reduction for amounts awarded for future medical care unless that care will be paid for by an entity with statutory lien rights. [Phew]

When you view this subject with an eye toward settlement, you must take the arguments of both sides of the “v.” into consideration. Defendants in some jurisdictions might consider offering a settlement plan that covers the plaintiff’s future damages through purchase of an ACA health insurance policy, provided that ample funding is also included to cover future premium, copayments, deductibles, coinsurance payments, and out-of network payments. They would also need to monetarily address any other future out-of -pocket expenses not normally considered to be “essential health benefits”.(5)

Plaintiffs in those jurisdictions should prepare themselves for the possibility that the defense will make offers reflecting this view. In preparing for negotiations, they should examine the risk that a health insurance policy under the ACA might fail to cover some of their future medical expenses and that any such uncovered future medical expenses would come out their pocket. If there is any doubt as to coverage of an item and the offer on the table involves the plaintiff assuming the risk of non-coverage, they should exact a premium for doing so (as would any risk-assuming insurance company).

I have heard it said that, in a good settlement, everyone walks away a bit unhappy. And yet the competing dynamics I have discussed above also open up opportunities for creative problem-solving. We have settlement tools today which I could have put to amazing use twenty years ago, if they had only been available.

Today more than ever, I believe we can legitimately address plaintiffs’ worries while exacting less of a toll on the defense. In this way we can help find a way to resolve more of your cases, keeping your destiny in your hands and not that of the members of a jury.

Do you have a case involving intricate future-care issues? Would you like help navigating all these complexities? Call Frank C. Kilcoyne, CSSC at 800-544-5533. I am here to help.


(1) USLegal, Inc. Collateral Source Rule Law & Definition, http://definitions.uslegal.com/c/collateral-source-rule/
(2) Seth L. Cardelli, “Thwart the Assault on Future Medical Expenses”, Trial Magazine, May 2014, Page 14

(3) N.Y. C.P.L.R. § 4545(a)
(4) N.Y. G.O.L. §5-335
(5) USA.gov, https://www.healthcare.gov/glossary/essential-health-benefits/