1. Past Medical Bills
Medicare has a lien in the amount of any bills paid on your behalf for injuries sustained in this incident. Medicare liens must be paid from the settlement proceeds. We will be able to reduce this amount by what is called procurement costs. Procurement costs are the amount of attorneys fees plus costs. If the fee and costs combined total 38%, the lien is reduced by 38%.
2. What is MSA?
A Medicare Set Aside Agreement is simply an account into which funds are deposited to pay your future medical bills.
3. Why is a MSA Necessary?
A MSA is necessary under the Medicare Secondary Payer Act. The theory is that it is not fair to settle your lawsuit and get money to pay your future medicals, put that money in your pocket, and then send the bill for those future medicals to Medicare. One solution is to have a professional calculate the expected cost of your future medical care and deposit that sum into an account.
4. How does a MSA work?
You could administer the MSA yourself, but that is never a good idea. The other way is to employ a professional custodian. The custodian will then issue a medical card for you. You will present that card to any medical providers who provide services related to your injury. The custodian will then pay whatever Medicare would have paid towards those services. If Medicare would not have covered the service at all, the MSA will not make a payment. If Medicare would have paid 80%, the MSA will pay 80%.
We will recommend a competent company with expertise in this are. They will issue the Medical care and take care of all of the reporting to the government and the payment of the Medical bills.
6. What does it cost?
There is usually a one time setup fee and an annual fee of 20% of the total allocation amount divided by the reduced life expectancy on a rated age, not to exceed a specified annual amount. There is a minimum annual fee per year.
7. Can I reduce the deposit into the account?
The answer is yes. A Medicare Set Aside calls for annual payments. It makes little sense to deposit funds now for money that is not needed for another 20 years. By buying a structured settlement, you can pay less money to the insurance company. They will then invest the money and pay the MSA custodian in 20 years. This usually results in a significant tax savings.
8. What happens if the MSA runs out of money?
An important concern is who will be responsible for payment of your medical bills if the MSA runs out of money. The answer is that Medicare would pay. If the MSA was funded with a lump sum and all of the money was used, Medicare simply steps in and pays the bills. In the case of a structured settlement, the structure will only make one payment per year. If the payment is made in January and the MSA runs out of money in June, Medicare pays until the next structure payment is received the following January.
9. What happens to the money in the account on death?
The structured settlement is designed only to pay during your lifetime. That money will expire on your death. If there is any money left in the account then that money passes under the terms of your Will.
10. Estate planning documents
Speaking of Wills, you should prepare a Will, Living Will and Power of Attorney. If you die without these documents, your loved ones may not be provided for as you would intent. Your Estate may become complicated to administer and disputes can be created.