What to Expect from Medicaid’s Claims on Settlements in NJ

Navigating the aftermath of a personal injury is often overwhelming. Between recovering from injuries, dealing with insurance claims, and understanding the legal processes, you may grapple with unforeseen complexities. If Medicaid has covered any medical expenses, one such complexity is Medicaid’s right to recover its costs from your settlement or award.

For residents of New Jersey, understanding Medicaid’s claims and how they might impact your settlement is crucial. Knowing your rights and the strategies available can help you protect your financial future. 

This guide breaks down the relevant laws, the calculation process, and actionable steps to minimize Medicaid’s impact on your settlement.

Medicaid’s Right to Recover Costs from Settlements

When Medicaid pays for medical treatment resulting from a personal injury, it has the legal right to recover those costs from any financial compensation you receive. This is called a Medicaid lien., which mandates that Medicaid beneficiaries assign the government the right to recover costs associated with their injury.

New Jersey further codifies this right in N.J.S.A. 30:4D-7.1, which grants the state’s Medicaid program authority to recoup funds spent on injury-related medical care. 

While Medicaid’s claims are enforceable, they are limited to medical expenses and cannot extend to compensation for pain and suffering, lost wages, or other non-medical damages.

This limitation was reinforced by the U.S. Supreme Court in Arkansas Dept. of Health and Human Services v. Ahlborn, 547 U.S. 268 (2006). In this landmark case, the Court ruled that Medicaid’s recovery is restricted to the portion of the settlement designated for medical expenses. This decision offers a vital safeguard for beneficiaries, ensuring that Medicaid cannot claim more than its fair share.

How Medicaid Determines Its Share

Medicaid’s share of your settlement depends on several factors, primarily the medical expenses it has paid for. However, determining this share is not always straightforward and may require negotiation or legal intervention. Here’s how Medicaid typically calculates its claim:

Medical Cost Allocation

If your settlement agreement identifies the portion allocated for medical costs, Medicaid will focus its recovery efforts on that amount. Proper allocation is essential because it limits Medicaid’s ability to claim other damages, such as compensation for emotional distress or pain and suffering.

Settlement Value vs. Expenses

Medicaid assesses whether your settlement fully compensates you for your losses. In cases where the settlement is insufficient to cover all damages, including medical costs, Medicaid’s recovery may be reduced proportionally.

Third-Party Liability

Medicaid investigates whether a third party is responsible for your injury. For example, if you were injured in a car accident, Medicaid may seek reimbursement from the at-fault driver’s insurance company.

Court Oversight in New Jersey

In certain situations, such as cases involving minors or incapacitated individuals, New Jersey courts may need to approve Medicaid’s lien. This oversight ensures fairness and protects vulnerable beneficiaries.

Strategies to Minimize Medicaid’s Impact on Your Settlement

Dealing with Medicaid liens can be challenging, but there are effective strategies to reduce their impact on your financial recovery. Here are actionable steps to protect your settlement:

1. Negotiate the Lien

Medicaid’s initial lien amount is not set in stone. You or your attorney can negotiate with Medicaid to reduce their claim amount, especially if the settlement does not fully cover all damages.

2. Leverage the Ahlborn Decision

The Supreme Court’s decision in Ahlborn provides a strong basis for limiting Medicaid’s recovery to the portion of the settlement allocated for medical expenses. Work with your attorney to use this precedent to your advantage.

3. Structured Settlements

Opting for a structured settlement can help minimize Medicaid’s claim. By spreading payments over time, you may reduce the immediate impact of Medicaid’s recovery efforts.

4. Special Needs Trusts (SNTs)

Consider setting up a Special Needs Trust if you rely on Medicaid for ongoing medical care. This legal arrangement allows you to preserve settlement funds for non-medical expenses while maintaining Medicaid eligibility.

5. Accurate Settlement Language

Ensure that your settlement agreement includes precise language outlining the allocation of damages. Clear documentation can limit Medicaid’s ability to claim funds unrelated to medical expenses.

6. Seek Professional Help

Navigating Medicaid claims requires expertise. Hiring an attorney experienced in Medicaid lien resolution can make a significant difference in the outcome of your case. They can handle negotiations, ensure compliance with New Jersey laws, and protect your financial interests.

New Jersey-Specific Considerations

New Jersey’s Medicaid program operates within the framework of federal regulations but also incorporates unique state policies. Understanding these nuances is essential for beneficiaries navigating settlement claims:

Statutes of Limitations

Medicaid has a limited timeframe for filing its lien. In New Jersey, this typically aligns with the statute of limitations for personal injury claims, generally two years from the date of the injury.

Fair Hearing Process

New Jersey offers a fair hearing process if you disagree with Medicaid’s lien amount. This allows beneficiaries to contest the claim and present evidence supporting a reduction.

Court Approval for Minors and Incapacitated Individuals

When a settlement involves a minor or an incapacitated individual, New Jersey courts often require approval of the agreement, including Medicaid’s lien. This added layer of oversight ensures that the settlement serves the beneficiary’s best interests.

Why Timing Matters

Addressing Medicaid’s claims early in the settlement process is crucial. Delays can lead to increased lien amounts or complications in resolving disputes. By taking proactive steps, such as consulting an attorney and negotiating the lien, you can protect your financial recovery and avoid unnecessary stress.

How Rosengard Law Group Can Help

At Rosengard Law Group, we specialize in navigating the legal complexities surrounding personal injury settlements in New Jersey. Our dedicated team understands the intricacies of Medicaid liens and is committed to helping you protect your settlement.

We’ve successfully represented clients in cases involving:

• Negotiating Medicaid liens to maximize financial recovery
• Ensuring fair allocation of damages in settlement agreements
• Protecting clients’ eligibility for Medicaid through Special Needs Trusts and other strategies

If you’re facing a settlement involving Medicaid claims, let us help you navigate this challenging process. Contact us for a free consultation at (856) 284-6446.