Being involved in an automobile collision can be disorienting, leaving you with more questions than answers. In this article, I will discuss how Medicare can impact a proposed settlement agreement.
What if I am in a serious crash caused by someone who only carries the minimum limits of insurance?
This is a common question I am asked by many of my clients. Good news: You have protections since you pay premiums on your own policy. They are triggered in these situations. For more information about how car insurance works generally, click here.
For the purposes of this article, let’s assume you are in a car crash. You are hit by someone who carries the minimum limit of $30,000.00. We will refer to the person who hit you as the “defendant.” Your initial ER treatment amounts to $35,000.00. This is more than the coverage available to the defendant. Are you stuck? No.
At this stage of the case, we look to your own insurance policy to see if you have any additional coverage afforded to you by what is called Underinsured Motorist (UIM) Coverage. In this situation, you have a UIM policy for $100,000.00. This means you can collect up to $100,000.00 for injuries sustained in this collision.
How do you collect insurance proceeds from two different insurance companies?
You can participate in something known as a Tender & Walk. This is a procedure created by the General Assembly in 2016 which allows plaintiffs to settle with the defendant’s insurance policy and proceed with their claim solely against their own insurance policy.
It looks a little like this:
- The defendant’s insurer offers to pay all of the limits of the insurance policy (this is called a “tender”). In our above example, that means that the defendant’s insurance will pay $30,000.00.
- The defendant’s insurance company will ask you to sign a release, which is a legal document that releases or shields the defendant from paying you any additional money.
- The defendant will also sign the release and agree to cooperate with your insurance company until the case has been fully resolved. If the defendant refuses to sign the release, he or she could face other consequences, so it’s in the best interest of the defendant to participate in the entire process. Whether or not the defendant participates in this process does not affect the settlement of your claim.
- The case with the defendant’s insurance company is now resolved, and you may proceed with your claim against your own insurance company. Doing so will not increase your premiums.
While these changes greatly affected a plaintiff’s ability to negotiate his or her case before trial, they also come with a few traps.
What if I have Medicare?
If you or your client has Medicare, you can proceed with a “Tender & Walk,” but only if using extreme caution.
At the time this article was written, Medicare did not have a procedure for reporting two settlements like those described above. When and how do you report a settlement to Medicare?
- You must report the settlement to Medicare when you accept the “Tender & Walk” from the defendant’s insurance company. You can report it to Medicare online or by calling in.
- This will create a formal letter also known as a Final Demand from Medicare in which they will ask you to repay them for what they paid your doctors for treatment related to this crash.
- Once you receive this letter, you should pay that amount.
- Then, when and if you settle with your insurance company, you need to report the settlement again to Medicare. This will trigger a new Final Demand, but it should be much less than the original amount.
What happens if you don’t report the initial settlement to Medicare?
Every insurer has a federal statutory duty to report any money paid to a Medicare beneficiary or someone who has Medicare for their health insurance. This means once an insurance company issues you or your client a check, they will report that money to Medicare. This triggers the Final Demand process described above. When the insurance companies report to Medicare, they do not include the costs of your legal representation or the cost of the expenses incurred in the case. This means the Final Demand will be for the full amount. Normally, Medicare will consider legal fees and expenses in offering a reduction.
You can appeal the Final Demand to fix things, but this will cause a significant delay in getting funds.
Dealing with Medicare can be a headache, even without a personal injury case thrown into the mix. And if this sounds like a lot to you, you are not alone. We can help! At Allen & Allen, we have experience helping clients with Medicare. If you have been in an accident through no fault of your own, call us for a free consultation at 1-866-772-1384.