If you or a loved one has been involved in a personal injury case and received Medicaid benefits for medical treatment, you may have been issued a Medicaid lien. This can come as a surprise as those on Medicaid do not generally know what costs Medicaid is covering (in dollar amounts), what components of a settlement they can apply to, and how liens might affect compensation.
The personal injury attorneys at Clear Counsel Law Group aim for transparency and like to inform clients about issues such as Medicaid liens early to prevent surprises. Winning a case should be a day when things feel settled, not a day where the rug gets pulled out and unknowns and hidden costs fall on your head.
Why Does Medicaid Issue Liens?
Medicaid (as a general practice) issues liens on personal injury settlements. Medicaid, as a government-funded health insurance program, provides medical benefits to those who cannot afford healthcare. When Medicaid pays for your medical treatment due to an injury caused by another party, they have a legal right to be reimbursed if you receive a settlement or judgment related to that injury. This reimbursement is enforced through a Medicaid lien, ensuring that Medicaid can recover some or all of the funds it spent on your medical care.
Entities that cover medical expenses tend to try and recoup what they’ve paid if there is a settlement. This isn’t too different from the way your insurance works in a personal injury lawsuit. Insurance pays for your bills, then after a settlement is awarded, they collect those funds from the negligent party’s insurance.
Components of a Settlement
Personal injury settlements cover various damages. These include:
- Past medical expenses
- Future medical expenses
- Lost wages
- Diminished earning potential
- Pain and suffering
- and sometimes punitive damages
Medicaid liens are primarily concerned with the part of your settlement that compensates for medical expenses paid by Medicaid. This means that while Medicaid has a claim to the portion of your settlement covering medical bills they paid, other components like compensation for pain and suffering or lost wages are not subject to their lien.
A compassionate personal injury attorney can brief you on the potential components of a settlement and how a lien will affect your distribution amount and timeline.
What Percentage of Medical Bills can Medicaid Lien?
The percentage of your settlement that Medicaid can claim depends on several factors, including the total amount of your settlement and the amount Medicaid paid for your treatment.
Laws controlling how much Medicaid can collect have been in flux over the last decade. Once, they were only able to collect a percentage of the settlement that was allotted to compensate for past medical bills.
As of June 6, 2022, Medicaid is entitled to be reimbursed for the full amount they paid. However, there are limits. For example, Medicaid cannot claim more than what your settlement allocates for medical expenses, nor can it take a portion designated for other types of damages.
The amount of a settlement allocated to each damages category is done under a pro rata system. This system gives weight to each category according to their size. It can be considered simply as divisions within divisions. A year is 365 days, but a month is about 30, and a week is 7. This is a pro rata of the days in a year, each category contains a division that makes up the whole.
Do They Waive or Reduce Liens?
In certain circumstances, Medicaid may waive or reduce its lien. This typically happens if the settlement amount is considerably lower than the value of your claim or if repaying the full amount would cause significant financial hardship. To negotiate a waiver or reduction, you’ll likely need to provide substantial evidence and reasoning as to why the lien should be adjusted. This process hinges on what arguments are made, negotiation skill, and often requires legal expertise.
Get Legal Help
Medicaid liens are a common issue following a personal injury settlement. Experienced attorneys know when they are likely to be issued and can work on your behalf to ensure that your settlement is fairly distributed. Certainly, Medicaid should recoup what they can, but they should not do so in a way that leaves you uncompensated for your injuries and suffering.
Medicaid liens on personal injury settlements are an aspect to consider when you’ve received Medicaid-funded medical treatment for your injuries. Understanding how these liens work, their impact on your settlement, and the possibility of negotiating them is essential. If you find yourself in this situation, don’t hesitate to seek professional legal help from Clear Counsel Law Group to protect your rights and ensure a fair outcome.