Medicare Lien - Settlements & Statute Of Limitations

By: Agnus Smith
Published: Tuesday, October 02 2018
Last Updated: 4 years ago

If you’re enrolled in Medicare or any supplemental plans, then chances are you’re at risk of Medicare liens. Medicare is the federal health insurance program for seniors that oftentimes ends up picking up the tab even when it's not supposed to, a problem that plagues taxpayers. When that happens, there it’s possible you’ll be the subject of a Medicare lien, something that can leave you paying for unexpected medical costs. Here’s how to protect yourself.

What Is A Medicare Lien?

A Medicare lien is when Medicare makes a payment on your behalf, even if there is a claim in a process that could end up paying for the care. The way it works is by Medicare paying for services while the claim is ongoing and once the claim gets settled, there is a lien that makes it so Medicare gets paid back for those services. Keep in mind, this lien only happens if the claim is won. If it's denied, then the lien doesn't happen and the services are covered the same as any other Medicare services.

Example Of When Medicare Won’t Cover Your Medical Expenses

Medicare will cover most personal injury cases, but they don't usually cover ones where you're at fault. Examples would be if you were acting irresponsibly or if you get injured doing something illegal. Medicare wants to make sure they don't get backlash for these types of cases, so they usually just stay out of them.

Medicare Lien Reduction Formula

Medicare liens aren’t random, which is a good thing. With the Medicare lien reduction formula, you should be able to get a good idea as to how much money is on the line. Essentially, once you figure out how much money Medicare has paid medical providers on your behalf, you can use the next steps to determine how much you will need to eventually pay back.

  • Figure out the procurement cost. This is done by adding the lawyer fees and costs.
  • Figure out the procurement ratio. This is done by dividing the procurement cost by the amount that's expected to be recovered
  • Figure out what Medicare's share is. This is done by multiplying Medicare's claim by the procurement ratio.
  • Figure out how much will be paid to Medicare. This is done by subtracting Medicare's share from the total amount expected to be recovered.

How To Fight Back Against A Medicare Lien

All this might seem like it's a losing battle, but there are ways to fight back against Medicare liens. For starters, you want to make sure you call Medicare to ensure everyone is on the same page. You also want to actually look at the liens to make sure that all the services being claimed relate to your case.

If you see some services that aren't related, then you want to contest them. The lien shouldn't have any services claimed that didn't relate to injuries that have to do with your case.

Hardship Waiver

With Medicare liens having the possibility of being extremely stressful, it's good to know that you have the option of filling out a hardship waiver. You have to meet the criteria, but these waivers can really take a lot of stress away. If your waiver is approved, the amount you have to pay back will either be completely diluted or greatly reduced. You'll have to fill out the form and the final decision will be made depending on what your circumstances are and what Medicare wants to do.

Medicare Lien Statute Of Limitations

Another thing to know about is the statute of limitations when it comes to these liens. You'll have peace of mind knowing that the Medicare lien statute of limitations is 6 years and 3 months. This means that Medicare has this amount of time to recover any money on the lien. Keep in mind, though, you have to cooperate with any notifications you get about the lien.

Even if the Medicare lien statute of limitations has passed, you want to make sure you answer the notification, then go from there. This not only looks good on you, but you'll have less chance of getting your wages garnished.

When Your Medicare Lien Is Higher Than Your Settlement

It can be unnerving when your settlement is less than the amount of the Medicare lien. Often times, though, Medicare is willing to make arrangements. One of the more common ones is when your lawyer gets 1/3, Medicare gets 1/3 and you get 1/3. This makes it so everyone gets some of the settlement money. You could also file one of the hardship waivers that was talked about before. The best thing to do is contact your lien representative to see what your options are.

Reducing Medicare Liens

The good news is that it's possible to reduce the amount of the lien. There's nothing worse than Medicare getting a bigger part of your settlement than you do. The best way to do this is to actually challenge the lien. You'll want to look at the list of services that Medicare covered and fight any that weren't related to your case. An example of this would be if you had to get a leg amputation and they try to claim services for the flu or something similar on the lien. Medicare can only claim the services that were actually related to your case.