Can Medicaid take your nursing home settlement money?

Under Federal and Georgia law, Medicaid may be entitled to some portion of a nursing home settlement directly related to payments for injuries. But what exactly does that mean? Under what circumstances can this amount be reduced or eliminated? In this episode, we discuss Medicaid’s rights to nursing home settlement money.

Schenk: Hello out there. Welcome back to the Nursing Home Abuse Podcast. My name is Rob. I will be your host this week as we tackle the topic of whether or not Medicaid, the federal program administered by the state of Georgia, is entitled to any portion of a settlement achieved through a nursing home abuse claim.

Before we talk about Medicaid and settlement money, I have a small favor to ask. If you are a regular listening to this program or if this is your first time listening, we would greatly appreciate it if you could like and subscribe wherever you get your podcast from or go to the YouTube channel for Nursing Home Abuse Podcast, and leave a comment. If you have any suggestions for content that you would like to see on this program, then please, by all means, shoot us an email, leave a comment, somehow reach out to us. We would love to hear from you. We would love the feedback. In fact, some of the episodes that are upcoming are a result of listener feedback, so super appreciate that. And without any further ado, let’s get into the substance of the episode.

Now the question of the day, the $64,000 question, is whether or not Medicaid, the federal program, is entitled to receive any portion of a nursing home abuse settlement or verdict or whatever the case may be, whatever recovery is awarded. Can Medicaid take a bite of it? And if so, why and when?

What is Medicaid?

What is Medicaid? That’s the first real question. Medicaid itself is a product of the – it’s an amendment to the 1965 Social Security Act. It is currently administrated by the Department of Health and Human Services, and within the Department of Health and Human Services, it falls under the gambit for the Centers for Medicare and Medicaid Services.

Medicaid itself is the primary source of health insurance for low-income people in the country. In fact, most recent statistics that I could get my hands on indicate that Medicaid pays for nearly 40 percent of all long-term care in the United States.

Under federal guidelines, each – and this is what makes Medicaid kind of a little strange, a little hard to navigate for the novice out there, but Medicaid, although a federal program, is actually administered by each state. So each state puts on their own special sauce on how Medicaid is run and ultimately how Medicaid can be compensated from a nursing home abuse settlement. But Medicaid typically covers low-income persons and low-income persons above a certain age. That’s typically how it works. That’s typically why it administers so much aid to long-term care residents.

Now the main point of today is to understand that Medicaid may be entitled to nursing home settlements under a couple of different legal theories. The first one is the idea that if Medicaid pays for essentially medical bills, medical services received by a recipient, then Medicaid typically is not expecting any money back. This is basically a federal insurance program. So if the nursing home resident goes about their day, there’s abuse, no neglect, they go to the hospital, Medicaid pays, that Medicaid recipient by and large is not expected to pick up the tab and repay Medicaid. That’s just everybody pays into the system.

Who is entitled to receive Medicaid in Georgia?

However, there are federal statutes and in fact statutes here in the state of Georgia, and again, I don’t know how Medicaid works in Idaho, I don’t know how Medicaid works in Montana, Massachusetts – this podcast for today’s purposes to the extent we’re going to be talking about the states, we’re going to be talking about Georgia because that’s what I’m most familiar with. But there are federal regulations and Georgia regulations that say when Medicaid pays for medical expenses for a recipient and those medical bills and that medical treatment was because of someone else’s negligence or tort of some kind, then if the recipient receives money from that tortfeasor or the person that’s at fault, then Medicaid can get reimbursed for the amount that they paid in those medical expenses. So again, Medicaid pays for a medical bill. Someone else is responsible for having caused that recipient to need that treatment. The recipient later gets a settlement or recovery of some sort from the person that’s at fault. Medicaid can jump in front of that line and receive money first or sometimes as the only one that can receive money, and that is a result of both federal regulations, federal statutes and state regulations. And that is typically going to be the same across the board. No matter what state you’re in, that concept is going to apply.

Is Medicaid allowed to take your settlement money?

In the state of Georgia, even to become a Medicaid recipient, the process by which you apply to receive Medicaid benefits, a part of that is to agree and acknowledge that fact. You are essentially assigning your rights to any type of recovery on behalf of Medicaid, so they can jump in line and take that money to the extent that they’ve paid.

So not to get too bogged down in the legal minutiae of it, but that’s typically how they get the bites of the apple. That’s how Medicaid gets bites of the apple. It’s the concept of subrogation, which again, I don’t want to – most of our listeners here are not attorneys and are not going to deal with that, but it’s kind of the same with the insurance, like your car insurance. If there’s a wreck, Medicaid can step in the shoes of the Medicaid recipient and get that money. That’s one way. The other way is, like I just mentioned, assignment. I know that at least in the state of Georgia, to be a Medicaid recipient, you have to assign any rights that you have to some type of recovery to Medicaid so they can step in your place and file suit if they want to against that tortfeasor or against the person that’s at fault. And then finally, at least in Georgia by statute, Medicaid can place what’s called a lien on settlements where they have paid for those medical bills.

What authority does Medicaid have over settlement money?

So that’s the general concept of how Medicaid has the authority to step in front of a nursing home resident when the nursing home is paying out money because they have abused or caused some type of injury to that resident.

Now the question that I get sometimes is, “Well Rob, is it worth pursuing a case if Medicaid is going to step in and take all the money?” We don’t know that at the outset of the case sometimes. Now a point that I want to make sure that we are crystal clear about is that Medicaid is only entitled to the amount of money that is actually paid by Medicaid for the treatment. And that seems like a no-brainer, “Rob, we understand that makes sense.”

No, the issue here is that typically if a resident goes to the hospital with an injury, let’s say it’s a broken leg, let’s say that the nursing home was negligent and caused the resident to fall and break their leg, so we have the tortfeasor, and when I say the tortfeasor, I mean the at-fault person, the negligent party, that’s the nursing home – the nursing home is the at-fault party, the tortfeasor. So the resident goes to the hospital with the broken leg. Let’s just say for the sake of this example that the cost of treatment for that broken leg is $100. That doesn’t necessarily mean that Medicaid is paying $100. Just because the bill is $100 doesn’t mean that’s what Medicaid has paid. By many different things that I don’t quite understand, many different regulations that I don’t care to learn about because it’s not necessary for me, I just know that if a bill is $100, Medicaid didn’t pay it all and sometimes it is $10. They’ve paid $10 of the $100 and the hospital writes off the rest through whatever contractual agreement they may have with Medicaid. So in that example, if the bill’s $100, Medicaid has paid 10, the rest of that bill goes away and the lien or the right of Medicaid to a settlement in that case is typically limited to $10.

So that’s kind of my response to clients when they say, “Well Rob, is Medicaid is going to take everything?” Not necessarily. They’re only entitled to what they paid out, and typically what they paid out is only a fraction of the medical bill, and again, that’s based on contractual relationships between the medical providers and Medicaid.

How does Medicaid affect wrongful death settlement money?

Then you typically, Medicaid will in some instances, in most instances, will reduce that amount that they’re owed by what’s called procurement costs, the cost by which the expenses of litigation or the amount that you have to pay an attorney. And the reason why that’s so is because typically Medicaid does not have an army of lawyers to go and sue nursing homes in order to get their money back that they’ve paid in medical expenses. So as an incentive, and when I say incentive, I’m using air quotes, as an “incentive” to have residents defend their rights and essentially proactively go after nursing homes to recoup or to get compensation, they will – Medicaid reduces their amounts owed by what the resident pays in expenses and attorneys’ fees.

So going back to our example, if Medicaid paid $10 of the $100 in medical bills and it cost the resident $4 to go after the nursing home, then the Medicaid would reduce that $10 by $4, and then they’re only owed $6, if that makes any sense. So not only is the amount that Medicaid is owed not the full amount of medical bills that exist, but they will reduce by a typical amount by a pro-rate share of the cost it takes to get a settlement.

So buttoning up our hypothetical out there, if you’re still listening and your eyes are glossed over, what happens is that if you’ve got – let’s say you have $100 in bills, the Medicaid amount paid is $10 and it costs $4, and let’s say that your settlement if $200, then Medicaid will still only be entitled in this example to the $6, the $10 minus the $4 in procurement costs. So that resident walks away with $194. Hopefully that makes sense. Maybe I should put up some flashy screen. I’m thinking of like it’s kind of like, I don’t know, what was that show where you draw on the whiteboard? It doesn’t matter.

So that is Medicaid in a nutshell with regard to settlements, nursing home settlements. They will get a piece of the pie. How much will depend on what they paid out, how much the case settles for, how much it costs for the resident to get the settlement.

How can an attorney minimize Medicaid’s right to recover?

Now in my experience, Medicaid can be pretty aggressive. They’re not going away, so it’s important to talk about these things at the outset, but I don’t think this is something that should necessarily scare anyone away.

There is one crinkle with regard to Medicaid and nursing home abuse settlements. At least in the state of Georgia, because Medicaid is a needs-based program, meaning that it is typically provided to people that do not have means, economic means, paid out through the course of one’s life, that if an estate, if someone passes away and they’re a Medicaid recipient and their estate is worth a certain amount. It is irrelevant how much money was in the settlement or how much Medicaid paid for the bills relating to the injury. If Medicaid is owed anything, they’re going to come after the estate.

So this gets a little bit confusing, so let me back up a little bit. So if you have a nursing home resident who passed away because of nursing home abuse, which is unfortunately a typical occurrence, then Medicaid is going to get what I refer to as two bites at the apple. The first bite is they are entitled, as we mentioned for the first top half of the episode, they are entitled to money paid for treatments for the resident related to that injury. They go to the hospital with a broken leg. Medicaid pays for treatment. They can get from the settlement the first bite, payments made that are related to that injury. That’s federal regulations. So that’s the first bite.

The second bite occurs when a settlement or recovery and all, if there are any assets of the estate, they all go into the estate, so that settlement that we talked about a minute ago, whatever portion goes to the estate as opposed to the wrongful death beneficiaries. In Georgia, wrongful death beneficiaries are typically the survivors of the deceased party, usually a spouse or children, so whatever is not allocated in that settlement to them would go to the estate, right? So now money from the settlement and money from whatever source, if the Medicaid has assets, they’re all – you put them all together, scoot them all together in a pile. And in Georgia, the typical threshold is $25,000, meaning that any amount over $25,000, whether or not it is related to the injury is eligible to go to Medicaid. In Georgia, typically any amount over $25,000 sitting in that estate is eligible to go to Medicaid, meaning that if your loved one who has passed away due to nursing home abuse has been on Medicaid for 10 years, five years, three years, and Medicaid has paid $50,000, $100,000, $150,000 over the course of that person’s life in benefits, that means that that is an amount of money that Medicaid can take from an estate if that estate has one penny or more over $25,000.

I hope that makes sense. It can a little strange, but that’s the second bite of the apple that I was talking about. First bite, first wave, only those costs that Medicaid pays out related to the injury when that case settles. Then once money is all dumped into the estate, and again, an estate can be a house, it can be, I don’t know, expensive jewelry, paintings, whatever the Medicaid recipient had, which typically is not a lot because, again, in order to qualify for Medicaid, you can’t be a billionaire, right? So typically the settlement often is the only thing that is going into the estate, but sometimes by different reasons, there are assets in the estate worth over 25,000 and then you can add on the settlements or a settlement and then you’re beyond the 25,000. And then Medicaid gets that second bite. Anything over 25,000 typically is going to Medicaid if Medicaid has been paying out money.

So the long and short of it is that Medicaid is coming after some money if they are a Medicaid recipient. They’ll get two bites if the case that your loved one is involved in is a wrongful death case or they’ve passed away because there necessarily will be an estate and the estate if going to have to pay back Medicaid to the extent that it can. So there are exceptions to rules. There are ways to minimize the debt that needs to go to Medicaid by different methods. In fact, there’s some recent legislation that changed the way settlements can be allocated in order to pay back Medicaid or not pay back Medicaid.

So there’s a lot of moving parts to these things, but it’s something to keep in mind. Again, it’s typically not something that is going to prevent a family from filing a lawsuit against a nursing home or pursuing a claim. It’s just something that the lawyer is going to have to work through and explain and plan for, quite frankly, because when you’re explaining what – when an attorney is explaining to a resident’s family, “Here’s the pie of where the recovery goes,” there will be typically a slice that is going to go to Medicaid. Just statistically speak, that’s just how it works.

I believe we covered everything or at least from a general standpoint with Medicaid, particularly how it works in the state of Georgia. And I know this is one of those episodes where it’s like, “Holy cow, that’s a lot of boring stuff,” but it’s important. It’s important to understand where this falls, where this factors into a nursing home abuse settlement.

So folks, thank you so much for watching if you’ve made it this far. You can like and subscribe to this podcast wherever you get your podcast from. New episodes every other week. They debut – I typically don’t like to use the word “drop,” I don’t know, I feel like an old man, but they drop every other Monday. We appreciate you listening, and with that, we’ll see you next time.