Personal injury cases have to be handled differently if an injured party qualifies for Medicare (must be 65 or older, on SSDI for 24 months or more or have end-stage renal failure) or will qualify for Medicare within two years. In these cases, a portion of a settlement must be set aside, separate from other settlement moneys, to pay for future medical bills incurred because of the injury or illness. By law, these Medicare Set-Aside accounts (MSAs) have to pay medical expenses first and be depleted before Medicare will pay for any additional expenses.
Injured parties can manage the MSA account themselves or hire someone to do it for them. An MSA administrator would pay the injured plaintiff’s medical expenses and make sure all MSA government reporting requirements are fulfilled.
In one example, a woman was injured in a slip and fall at her local grocery store. The fall resulted in a fractured hip and shoulder. The settlement amount was in excess of $2 million. The settlement was set up so that the claimant received over $100,000 cash up front. Another $50,000 was placed in a MSA account as seed money and $103,000 went in a MSA annual supplement so the claimant would receive $13,250 annually. She received $8,500 a month for life for assisted living, $30,000 for non-Medicare covered items and the rest went to fees and costs. With the funds compounding tax-free at a 3 percent annual return on the balance, the actual expected payout is in excess of $3 million.
MSA cases are much more complicated than a traditional personal injury case. The goal is to create a plan that protects all parties and ensure that there are assets and resources to improve the injured party’s quality of life while not affecting government benefit eligibility.
For any questions about MSAs, please give me a call—Pat
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