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Medicare Lien Formula Explained

Medicare is the Federal health benefit available to seniors and those determined to be disabled by Social Secuirty Disability.  Every pay check you get has taxes taken out to pay Medicare.  If you have a personal injury case and receive a settlement, Medicare has a right to be paid back for any medical costs they have paid as a result of some third party's negligence.  Think of it as Medicare "loaning" you the money until you get your settlement.

Medicare Formula:  They don't get all the money

Medicare "allows" for attorney fees when they get their money back.  Here is how that works:

HOW to Reduce Medicare's Lien:

1.      Total Amount of Liability Settlement:  $________     

        Amount of Medical Pay Settlement: +  $      _____

                     TOTAL Received(ITEM A)      $________       

            

2.      Amount of Attorney's fees                  $________     

         Other Procurement expenses/cost +  $      _____

                     TOTAL Fees/Costs (ITEM B)  $ ________    

3.      (ITEM B) $_________  ÷  (ITEM A) $_______ = RATIO  ._____    

4.      LIEN x RATIO = $ ________Reduction Amount     

5.      LIEN – Reduction Amount = FINAL LIEN $__________ 

Here is an actual example of how the lien works out using a "real life" scenario:

EXAMPLE

Medicare Claims $40k

  $100,000   Settlement

+$   5,000   Med Pay

  $105,000  ITEM A

  $33,333.33   Attorney Fees

+$ 5,642.00   Costs

  $38,975.33  ITEM B

Item B $38,975.33 ÷ Item A $105,000 = .3711

$40,000 (total lien claimed) x .3711  $14,844.00 Reduction Amount

$40,000 - $14,844 =  $25,156 FINAL LIEN

Because Medicare is a Federal Program, this formula should hold true for any state in the nation.  Of course, each area will have a different Medicare contact number.

Chris Nichols

www.NicholsTrialLaw.com

www.NicholsTrialLaw.com 1.800.906.5984

Comments

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Bruce L

Great post, very helpful for those of us that don't do this type of law all the time.

Steve

Since this article was posted in 2006, and a new law was in effect as of July 2009, “Medicare Medical, and SCHIP Extension Act of 2007.” Does this formula still stand with the newly revised SCHIP laws?

coach outlet

Wow,wish the killing would just stop.... for both sides ...

Gary

So does this apply to all medicare? Like, how about NC medicare?

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