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What Is A Liability Medicare Set Aside?


Let’s say that you have an injury case, and Medicare pays some of your medical expenses. You settle your case, pay back any doctors money that they are owed, deduct attorneys fees, and you’re done — the rest of the money is yours, right? Well, not so fast. Medicare will want a piece of that settlement or verdict also.

Why Medicare Wants to be Paid Back

The reason why Medicare wants to be paid is that it paid your medical expenses (or part of them), but you also got paid for your medical expenses from the other side, the party that you sued. That means that you got paid those medical expenses twice. Medicare wants to be paid back, for the money that it fronted for you (of course, if you don’t get paid for medical expenses out of a settlement or a verdict, or you were to lose your case, Medicare wouldn’t ask to be paid back).

Medicare is also considered as secondary payor, meaning that they have to be your last option, after your own health insurance, or any other source of insurance that may be available to pay your medical bills after an accident.

Even if Medicare does want to be paid back, you can often negotiate with Medicare, so that you don’t have to pay them back 100% of what they paid out towards you.

Future Medical Expenses

The problem comes with settlements or verdicts that compensate you for future medical care.

Let’s say that you are awarded $100,000 for ongoing, future medical care as a result of injuries you sustained in your accident. You could, in theory, spend that money on anything you want—cars, trips, houses, or a boat—and then later, when you actually need medical care, you would then call on Medicare to pay your medical expenses.

But Medicare doesn’t want that. Medicare wants to make sure that if you are compensated for future medical care, that you use the money for future medical care, so that Medicare doesn’t get left holding the bag (that is, paying the bill), while you use your future medical expense money for 100 other things.


The way that Medicare ensures that the money you received for future medical care actually gets used for future medical care, is by requiring that you set up a Liability Medicare Set Aside, or LMSA.

In workers compensation cases, it is required that LMSAs be used, where there is payment for future medical care. But the law isn’t so clear on whether LMSAs are required in personal injury cases. Still, it is good practice to set one up, if there is payment for future medical care, to avoid a claim from Medicare down the road, when you do incur medical expenses.

 Call the Clinton personal injury attorneys at Fox Willis Burnette, PLLC, for help today. We can help you figure out how to pay your medical bills and expenses after an accident.

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