Expanded Medicaid Changes the Game in Workers’ Comp - Insurance Thought Leadership

Advertisement

http://insurancethoughtleadership.com/wp-content/uploads/2014/04/bg-h1.png

Facebooktwitterredditpinterestlinkedinmail

December 11, 2013

Expanded Medicaid Changes the Game in Workers’ Comp

Summary:

For those familiar with its provisions, ACA provides new mechanisms for funding future medical care that can facilitate settlement negotiations.

Photo Courtesy of

The workers’ compensation community appears oblivious to the fact that the Affordable Care Act (“ACA”) can facilitate settlements while also introducing a complicated new question because beneficiaries of expanded Medicaid are not subject to the asset limitations of traditional Medicaid.  (Medicaid is called “Medi-Cal” in California.)

Medicaid is a federal program of healthcare benefits for the indigent that is administered by the states.  Anyone receiving Supplemental Security Income, i.e., “welfare,” qualifies for Medicaid.  Some workers’ compensation claimants and their families may be receiving Medicaid benefits that cover their non-industrial medical needs.

Traditional Medicaid limits both the assets and income an enrollee can have.  For example, a traditional Medicaid single enrollee cannot have more than $2,000 cash.

The Affordable Care Act adds a new Medicaid category, expanded Medicaid.  Twenty-five states plus the District of Columbia have committed to expanding Medicaid coverage, according to the Advisory Board Company as of November 20, 2013.  Another four states are considering expansion.  Eligibility for expanded Medicaid has no asset rule.  The only financial rule is that the enrollee’s Modified Adjusted Gross Income (“MAGI”) cannot exceed 133% of the federal poverty level.  (Just to make things complicated, there is a 5% income disregard, so actually the demarcation is 138% of the federal poverty level.)  For 2013, the Department of Health and Human Services defines the federal poverty level as $11,490 for the 48 contiguous states and District of Columbia.

Other qualifications for expanded Medicaid are that the enrollee is aged 19 to 64, meets the applicable state’s citizenship requirements, and is not incarcerated.  Also, the enrollee cannot be entitled to Medicare.

Theoretically, then, under expanded Medicaid a workers’ compensation claimant with negligible income could walk away with a million-dollar settlement, stash it in a no-interest bank account, a structured settlement, or a mattress, and still qualify for publicly funded healthcare for most expenses while privately funding the rest.

Before ACA, a settling claimant who wanted to preserve access to Medicaid would need to establish a Special Needs Trust (“SNT”).   Taking the settlement directly would run afoul of the asset rules.  With an SNT, the claimant has no direct access to settlement funds; only the trustee does.   The claimant continues to access public benefits for basic needs, and the trustee can spend trust money to pay for supplemental needs.  The injured worker’s state has a lien on the trust for what Medicaid paid, due on the injured worker’s death.

ACA complicates advising the injured worker on whether to accept settlement proceeds directly or whether to set up an SNT.  Attorneys representing injured workers must determine whether a claimant would qualify for Medicaid, and which type.  Claimants and their advisers must also decide whether to pursue the earn-no-interest route. Looked at in a vacuum, this is certainly a bad investment.  This is especially true for larger settlements where intelligent management can produce enough income to fund healthcare and other needs without turning to Medicaid.

Now that ACA prevents health insurers from denying coverage based on a pre-existing condition, claimants can use settlement proceeds to purchase private health insurance through an exchange.    ACA subsidizes health insurance premiums for those with MAGI under 400% of the federal poverty level.

On the other hand, some injured workers may still need an SNT because they are not competent to manage their own funds and lack a trustworthy family member to do it for them.  Also, traditional Medicaid provides some benefits that are typically not available through any private health insurance plan, notably home health care.  For these injured workers, a Special Needs Trust is required to retain traditional Medicaid benefits.

In general, the ACA could facilitate settlements. As part of valuing a claim for settlement purposes, parties usually look at past medical expenses, project them over the claimant’s anticipated life expectancy and add or subtract based on certain assumptions as to inflation and continued usage.  Arriving at this value is frequently the biggest issue in settlement negotiations.  An alternate evaluation method is to compute the premium for health insurance obtained through the ACA exchange.  If ACA can provide a source for paying continuing medical expenses—either through Medicaid or private health insurance– parties may be more likely to close a workers’ compensation claim at a mutually acceptable figure.  Disputed medical issues may become moot.

Negotiating Tip

Because politics can sometimes get in the way of clear thinking, it may be best to use the name of the law rather than the politically charged nickname.  Television clips have shown the man and woman on the street condemning “Obamacare” while praising “the Affordable Care Act.”  One man said in praise of Affordable Care, “The name says it all”; he had just emphatically stated that “Obamacare” was terrible.

Close the Claim

Experienced workers’ compensation professionals recognize that closing a claim, including future medical in states that permit it, is a win-win for many reasons.  Injured workers take control of their own medical care and can cash out future benefits.  Employers and their carriers eliminate the risk of runaway medical expense, close the reserve and, if applicable, recover the bond.

For those familiar with its provisions, ACA provides new mechanisms for funding future medical care that can facilitate settlement negotiations.

description_here

About the Author

Teddy Snyder mediates workers’ compensation cases throughout California through WCMediator.com. An attorney since 1977, she has concentrated on claim settlement for more than 19 years. Her motto is, “Stop fooling around and just settle the case.”

+ READ MORE about this author ...

Like this Post? Share it!

Add a Comment or Ask a Question

blog comments powered by Disqus
Do NOT follow this link or you will be banned from the site!