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Medicare’s Right to Insurance Awards

Q. My mother has just gotten a large settlement from her auto insurer for injuries received in an accident two years ago. Is she required to reimburse Medicare for the cost of treating those injuries?

A. Yes. In these situations, Medicare is always secondary to liability and no-fault insurance. Usually, doctors and hospitals send their bills to the insurance company before billing Medicare. But as your mother found out, it can take months or years for insurance claims to be settled. In the meantime, Medicare can cover treatment for the injuries on a “conditional” basis. This means that Medicare must be reimbursed for its share of the medical expenses if and when an award for damages is made in the injured person’s favor.

When an insurance award is made, Medicare has “priority right of recovery”—in other words, it has first claim on the money. It’s important for the injured person, or the person’s attorney, to inform Medicare of the settlement as soon as possible after it’s made. The money due to Medicare must be repaid within 60 days of the settlement—otherwise interest charges may be added.

If your mother had legal help in making this claim, she should find out whether her lawyer has yet taken steps to contact Medicare about reimbursement and whether Medicare has issued a recovery letter specifying the amount to be repaid. Otherwise, she should call the Medicare help line at 1-800-633-4227 to ask about the process required for repayment.

For more information on how Medicare works with no-fault or liability insurance claims, see the online publication “Medicare and Other Health Benefits: Your Guide to Who Pays First.”

Patricia Barry is a senior editor at the AARP Bulletin.

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