Determining the amount of the Medicare Set-Aside allocation is a vitally important part of settlement for many liability and Workers’ Comp cases. The amount is determined by adding up the cost of future medical treatment (which would otherwise be payable by Medicare Parts A & B) and future prescription drug treatment (which would otherwise be payable by Medicare Part D). An accurate allocation will help your client retain as much of the settlement as possible, while also ensuring that Medicare’s interests are protected.
Why Not Stick With the Allocation Provided By the Defense?
The defense broker is not required to keep your client’s best interests in mind, and by using their allocation report, you run the risk of using something prepared by a carrier tied to the defense.
As I mentioned in a previous post, there are a number of factors that may not be taken into account by the defense’s allocation firm, including life expectancy, estimated generic pricing of prescriptions, and the use of structured arrangements. These factors can all contribute to the cost of the MSA—sometimes significantly. In addition to reviewing the allocation prepared by the defense, your client also has the right to obtain a report from an allocation firm selected by the plaintiff’s attorney and/or settlement consultant.
Case Example: Defense Allocation vs. Plaintiff Allocation
To illustrate this point, here is an actual example of allocation reports that were prepared for one of our clients.
Female, 50 YO
Rated Age: 57
Life Expectancy: 30 Years
Injury: Traumatic Brain Injury
Defense Carrier Allocation:
Lifetime Services: $38,212.00
Lifetime Prescription Medication: $247,023.00
Lifetime Total: $285,235.00
Plaintiff Carrier Allocation:
Lifetime Services: $45,311.66
Lifetime Prescription Medication: $71,996.25
Lifetime Total: $117,307.91
While there is not always such a drastic difference, it is still wise for your client to get a second opinion from an allocation firm that isn’t tied to the defense’s interests.
A West Point graduate where he served as captain and military aviator, John Bair continues his commitment to our country through his efforts within the settlement planning industry. He has represented families of victims lost in the Flight 3407 crash, offered pro bono services to the families of 9/11 victims and drafted the first consumer protection bill for plaintiffs (H.R. 3699).