How Much Will Medicaid Take from My Settlement?

Sunday, June 30, 2024

How Much Will Medicaid Take from My Settlement?

Written by Malman Law, reviewed by Steve J. Malman.

It can take several months or years to receive a settlement amount when seeking compensation from an at-fault party. While pursuing an insurance claim or lawsuit, you may incur medical bills for treatment.

Consequently, injured victims might rely on Medicaid coverage to pay these bills. How much Medicaid will take from your settlement for reimbursement depends on the facts of your case, the state’s rules, and the type of settlement you receive. While it may sound complicated, there are ways to determine Medicaid’s share.

A trusted personal injury attorney in Chicago can provide legal advice on Medicaid’s share and ways to maximize your settlement amount.

Basics of Medicaid: What Medicaid Is and Who It Serves

Medicaid is a government program jointly funded by the state and the federal government to provide health coverage to over 90 million Americans. Each state manages its Medicaid program within federal guidelines. The federal government covers at least half of the funding for Medicaid.

Because Medicaid is funded by both federal and state governments, the specific rules and services can vary slightly from one state to another. To qualify for Medicaid in Chicago, you must meet certain income and residency requirements.

Here’s the eligibility criteria for Illinois Medicaid as established by the Affordable Care Act.

Importantly, your income before taxes must be below certain thresholds, which vary based on the number of people in the household:

Annual Income Thresholds by Household Size

A Medicaid attorney can handle the application procedure on your behalf. They will ensure the necessary documents are correctly completed and submitted to reduce the risk of delays or denials.

How Much of Your Personal Injury Settlement Can Medicaid Take?

Medicaid determines its share of your personal injury settlement depending on the amount spent on medical care related to the injury. Suppose a slip-and-fall victim incurred a medical bill of $10,000 but received a personal injury settlement worth $50,000.

In that case, Medicaid can deduct $10,000 from the settlement value to recover the money the patient spent on medical care during recovery.

The exact value of the medical lien can vary based on state rules and other factors. The Illinois Health Care Services Lien Act allows a maximum of 40% liens, meaning a healthcare provider or professional cannot take an amount that exceeds 40 percent from the settlement award.

Similarly, no individual claimant can execute a claim larger than one-third of the settlement award. If the liens to a single settlement award exceed 40%, no single party can claim a lien greater than 20% of the settlement award.

In other instances, healthcare providers and professionals bill their services under a single entity. In such a case, state law encourages a reasonable allocation of their fees and the separation of the liens.

That said, a healthcare institution and a provider can file a separate lien when necessary.

Why Can Medicaid Take Money from My Injury Settlement?

Illinois state law allows healthcare providers and professionals to care for and treat injured victims, except in workers’ compensation cases, where they can hold liens against an injured person’s pending claim.

A medical lien, sometimes called a hospital lien, is an agreement between a doctor or a healthcare provider and the patient. It is a legally binding contract that allows a healthcare provider or a physician to offer treatment services without requiring money upfront.

The purpose of liens, including Medicaid, is to ensure that a patient with no other means to pay for healthcare receives timely treatment services while undergoing the steps of a personal injury case.

When the patient receives a settlement or jury award at the end of a personal injury case, the medical care provider exercises the power of lien to recover the cost of care they offered.

Understanding Medicaid Laws

When an injured person receives a personal injury settlement, they must provide a written statement to a healthcare provider or professional who may hold a valid lien against the judgment or award.

For a Medicaid lien to be valid, it must include the following information in the contract:

• A statement that describes the nature and extent of the victim’s injuries
• A statement with details of the nature and extent of medical care provided to the patient
• A written statement regarding how the injury occurred, including healthcare records.

Your eligibility for Medicaid benefits can become compromised if your financial status changes after receiving a personal injury settlement.

The Formula for What the State Department Can Take

If the government kicks in to help pay your bills as you wait for the personal injury settlement, Medicaid has a right of lien over your judgment or award. The money they can recover varies based on individual programs and your needs.

However, it is possible for a lienholder to accept a lower amount than the initial claim. Your personal injury attorney can negotiate for a reduction of the lien amount. For instance, an attorney can evaluate all the charges in the claim to ensure they’re reasonable.

For an attorney to negotiate successfully with Medicaid, they often gather necessary documentation and evidence to support the case. Proving a reduced medical lien requires tabling various records, including medical bills, expert opinions, and specialist reports.

Medicaid Liens on Settlements: Explaining Medicaid’s Right To Claim Reimbursement From Settlements

If you receive a settlement from a personal injury case while being covered by Medicaid, it’s important to know that Medicaid has the right to pursue compensation for medical costs it covered related to your injury. This is known as a Medicaid lien.

Essentially, before you receive your portion of the settlement, Medicaid will claim back the costs it incurred on your behalf. The amount that Medicaid can claim isn’t fixed; it depends on various factors, including the total settlement amount and specific expenses incurred.

Medicaid is often termed as one of the most complex programs administered by the government, especially regarding:

• Gifting
• Eligibility
• Surplus income
• Utilization of pooled income only trusts
• Penalty periods and exceptions

Therefore, it is good to work with a lawyer who will work with Medicaid to review the charges and negotiate on your behalf so Medicaid won’t take more than necessary from your settlement.

Paying back Medicare After Settlement

Similar to Medicaid, if Medicare covered the medical costs related to a personal injury, it also requires reimbursement from your settlement. This process is termed “Medicare Conditional Payment Recovery.”

The Medicare Secondary Payer statute, under the Social Security Act (42 U.S.C. § 1395y(b)), grants Medicare the authority to seek reimbursement from a settlement that compensates for medical expenses initially covered by Medicare. This means Medicare has the right to seek reimbursement.

Essentially, Medicare will place a lien on your settlement to recover the costs it incurred for your medical treatment. Therefore, you must address these liens because neglecting them could result in significant legal and financial repercussions.

Fortunately, it’s possible to negotiate the lien amount with professional legal assistance. In some cases, our attorneys have successfully reduced or even eliminated the lien entirely to reduce the amount Medicaid takes from the settlement. This negotiation process involves meticulous review and documentation to contest inaccurate or unjustified charges.

Medicare uses a more standardized and regulated approach to recovering medical costs from a personal injury settlement, termed ‘’Medicare Conditional Payment Recovery’’. The process gives Medicare a special right of reimbursement directly from settlement funds.

A personal injury attorney with hands-on experience in Medicaid and Medicare can provide valuable expertise and legal advice throughout the settlement process. They can also negotiate with Medicaid to minimize the reimbursement amounts, ensure legal compliance, and protect your interests.

Get in Touch With an Experienced Personal Injury Attorney

The prospect of recovering from an injury depends on the value of your settlement amount. While a health provider has a right of payment over your settlement amount, it should not be at your expense. As such, you deserve representation from an experienced attorney who’ll protect your interest during settlement talks. Malman Law Chicago personal injury lawyers have decades of experience representing injured victims. Contact us for a free case review.