Medicare Set-Aside and What You Should Know

The implications of the latest implementation of new Medicare reporting rules and the idea of Medicare set-aside trusts are yet to be fully realized by legal experts and attorneys. This has caused a considerable setback in the process of preparing their clients too. Also, wide spread speculations about these implications have caused insurer’s to delay the process of providing awards to the plaintiffs.

If Medicare provided the payment, or has to provide future payments for the care based on the alleged injury, new Medicare Secondary Payer rules necessitate that the lawyers, insurers, and even the plaintiffs to bring such personal injury settlements, or other awards to the notice of the Centers for Medicare and Medicaid Services (CMS). Otherwise, a fine of up to $1,000 per day can be slapped and a lien on the award for Medicare reimbursement could be imposed.

This ambiguity over the stipulated rules has, on one hand, caused the government to postpone the implementation twice before it finally decides to bring them into effect on Jan.1, 2011. On the other hand, the reporting stipulation applies to a one-time payment that is done on or after Oct. 1, 2010 and the current care settlements and awards made on or after Jan. 1, 2010. This is a major drawback for attorneys who have yet to prepare for the new stipulations. Hence, the situation, is pushing the personal injury and elder lawyers, insurers, and clients to be in a tight spot.

Attorneys agree that the primary reason as to why the clients tend to be frightened by the whole deal is that right from the moment a client lays a hand on the money; he/she is ushered into an uncomfortable spotlight. Furthermore, many insurance companies are now playing it safe by issuing the drafts on the name of Medicare.  This invariably slows down the whole settlement process because negotiating such a deal is extremely difficult for both CMS and the client.

To deal with the problem of reporting requirements, some lawyers advise something else. To many, they suggest that the concept of Medicare set-aside trusts. This will ensure that there are enough funds set aside to pay CMS if Medicare pays out or will pay out for care for which the concerned party is responsible.

A few insurance providers have in fact, made such Medicare set-asides a necessity for making a payout. Subsequently, statements from CMS and other relevant bodies clarified that there is no rule that mandates the requirement of such a Medicare set-aside for liability claims. However, many attorneys concur on the fact that establishing such Medicare set-aside trusts are the most reliable way to shield their clients and themselves.