BROOKLYN MEDIA GROUP APRIL 13 - APRIL 19, 2018 21
THE ELDER LAW MINUTE TM
Medicaid and settlements: How much can Medicaid
recoup for medical expenses?
Sometimes, when an individual is
severely injured due to medical malpractice
or the negligence of another,
a component of his medical coverage
can be paid by the state’s Medicaid
program.
This would be the case if the
individual’s own insurance was
insufficient to cover the cost of care
and the person was eligible for
Medicaid benefits. If the injured
individual is ultimately rewarded
funds through a personal injury or
medical malpractice claim, the state
can recover a portion of such funds
in order to reimburse itself for the
care it provided.
When an individual is awarded a
settlement in a medical malpractice
or personal injury suit, it is typically
for more than just the medical
expenses. A component of the award
is often attributable to pain and suffering,
loss of wages or an ongoing
disability. A commonly asked question
is how much the state’s Medicaid
program can recuperate from the
settlement.
BY RONALD A. FATOULLAH, ESQ. & DEBBY ROSENFELD, ESQ.
Prior to 2006, some states would
claim from victims more than just
the part of the award or settlement
covering the medical expenses,
regardless of how much of the settlement
was specifically earmarked
for those expenses.
As an illustration, consider that
Medicaid paid $200,000 for an injured
individual’s medical expenses. The
individual then arrived at a settlement
and received $300,000, of which
$100,000 was allocated for medical
expenses, $100,000 for lost wages and
$100,000 for pain and suffering.
Some states would recover the
entire $200,000 laid out by them,
leaving the injured person with only
$100,000, even though the settlement
allocated only $100,000 towards the
medical expenses.
In the 2006 decision of Arkansas
Department of Health and Human
Services, et al. v. Ahlborn, the United
States Supreme Court ruled that
states could only recover the portion
of the Medicaid expenses that the settlement
attributed to medical costs.
Based on Ahlborn, even if the state
paid a higher amount (as reflected in
the above example), it could only be
reimbursed pursuant to the amount
specifically attributable to medical expenses
in the settlement agreement,
leaving the balance for the recipient.
Despite the Ahlborn decision, Congress
amended the Social Security
Act in 2013, thereby giving the states
the right to recover their entire medical
expenses from Medicaid beneficiaries’
awards and settlements.
The entire amount laid out by the
states via their respective Medicaid
programs could be reimbursed
before the beneficiaries received
anything. Since 2013, many attorneys
have fought to eliminate this provision
and were successful in delaying
its implementation until October of
2017.
The recent budget deal signed by
President Trump on February 9,
2018 has repealed the law in its entirety,
thus reinstating the Ahlborn
holding. Going forward, a state’s
Medicaid program will only be able
to recover the medical expenses specifically
delineated in the settlement
agreement, even if such amount is
less than what was actually paid. This
will enable the injured person who
initiates a lawsuit to keep a greater
portion of his settlement.
In order to protect these proceeds
from future state retrieval, the
recipient can transfer the proceeds
to a special needs trust. Seeking the
counsel of an experienced elder law
attorney to help navigate this process
is most advisable.
Ronald A. Fatoullah, Esq. is the principal
of Ronald Fatoullah & Associates,
a law firm that concentrates in elder
law, estate planning, Medicaid planning,
guardianships, estate administration,
trusts, wills, and real estate.
Debby Rosenfeld, Esq. is a senior staff
attorney at the firm. The law firm can
be reached at 718-261-1700, 516-466-
4422, or toll free at 1-877-ELDER-LAW
or 1-877-ESTATES. Mr. Fatoullah is
also a partner with Advice Period, a
wealth management firm, and he can
be reached at 424-256-7273.
URSULA A. GANGEMI Esq.