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How Medigap Policies can be a
Useful Tool in Settling Certain
Workers’ Compensation Claims



By Steven F. Chapman and Gregg Chapman, Esq.
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Steve Chapman and Gregg Chapman, Esq. specialize in structured
settlements of workers’ compensation cases. In this article they discuss how Medigap policies can help calculate and cover future medical treatment for
injured workers on Medicare or Medicare-eligible.
   
For more information on structured settlements and the structure broker’s role, see:
 
 
 
The calculation of certain non-Medicare medical expenses involved in a workers’ compensation settlement can be made easier with the use of a Medigap Policy (also called “Medicare Supplement Insurance”). It has been well documented that a Medicare Set-Aside (MSA) does not include all the future medical expenses that an injured worker will need when settling their claim. For example, health care costs like copayments, coinsurance and deductibles are not covered by Medicare, thus they would not be included in the MSA. However, by including the cost of a Medigap policy into the settlement calculation, these non-Medicare expenses will be taken into account.
 
By including the cost of a Medigap policy into the settlement calculation, non-Medicare expenses will be taken into account.
It has been a challenge to accurately calculate future medical expenses since the Centers for Medicare & Medicaid (CMS) started taking an active role to protect Medicare’s interests in workers’ compensation settlements. CMS introduced the MSA in 2001 and recommended its use when settling a workers’ compensation claim involving a Medicare beneficiary (or an individual who would soon be a beneficiary). As we all quickly educated ourselves on Medicare benefits, it became obvious that Medicare didn’t cover everything, thus the need to determine the additional costs over and above what was included in the MSA. Some of these costs include off-label prescription medication, the Medicare Part D (prescription drug) donut hole, deductibles and co-pays, home care, transportation, etc. The focus of this article is another of these non-Medicare medical expenses that needs to be taken into account when negotiating a workers’ compensation settlement. Specifically, the copayments, coinsurance, deductibles and premiums related to Medicare Part A (hospital insurance) and Medicare Part B (medical insurance).
 
It has been a challenge to accurately calculate future medical expenses.
Medigap policies were designed to help pay some of these health care costs that Original Medicare does not cover. Thus, by including the cost of a Medigap policy into the settlement calculation as a Non-Medicare expense, these copayments, coinsurance, deductibles and premiums will be taken into account. If the applicant has Original Medicare (as opposed to a Medicare Advantage Plan like an HMO or PPO) and a Medigap policy, Medicare will pay its share of the Medicare-approved amounts for covered health care costs. Then the Medigap policy pays its share. A Medigap Policy can be very valuable when you consider that Medicare typically pays only 80% of a covered expense. Additionally, Medicare Part A (hospital insurance) and Medicare Part B (medical insurance) have annual deductibles that must be paid by the beneficiary before Medicare will make any payments. Monthly premiums for Part B are another expense that must be paid for by the beneficiary. It would be extremely difficult to calculate these costs without using a Medigap policy.
 
Medigap policies were designed to help pay some of these health care costs that Original Medicare does not cover. By including the cost of a Medigap policy into the settlement calculation, the attorney can deal with the dilemma of how to calculate future medical treatment.
 
Every Medigap policy must follow Federal and state laws designed to protect the beneficiary, and the policy must be clearly identified as “Medicare Supplement Insurance.” Medigap insurance companies in most states can only sell you a “standardized” Medigap policy identified by letters A through N. Each standardized Medigap policy must offer the same basic benefits, no matter which insurance company sells it. Cost is usually the only difference between Medigap policies with the same letter sold by different insurance companies. The premium set by the insurance company is based on the age of the beneficiary and the community where they live.
 
Every Medigap policy must follow Federal and state laws designed to protect the beneficiary.
 
Medicare Part D (prescription medication) is not covered by current Medigap policies. Although some Medigap policies sold in the past covered prescription drugs, Medigap policies sold after January 1, 2006, are not allowed to include prescription drug coverage. In order for the injured worker to obtain prescription drug coverage, they have to join a Medicare Prescription Drug Plan (Part D) offered by private companies approved by Medicare.

Medigap policies are sold by private companies. These include AARP, Aetna, Healthnet, Blue Cross Blue Shield, Humana and several others. Each of the standardized plans A through N offer different benefits. Medigap Plan A covers the most basic benefits. Medigap Plan F provides the most comprehensive coverage and offers a high deductible option. Once you determine the Plan that will best fit the future needs of the injured worker, you can obtain the cost from an insurance broker or on the internet. Monthly premiums are typically in the range of $100 to $350 depending on the plan chosen and the age of the applicant.
 
Medigap policies are sold by private companies. Monthly premiums are typically in the range of $100 to $350 depending on the plan chosen and the age of the applicant.
 
Your structured settlement broker can determine the present value annuity cost of the Medigap plan. This amount can then be factored into the settlement proposal. As a result, this important non-Medicare cost will be accounted for so that future medical expenses do not come up short.
 
Your structured settlement broker can determine the present value annuity cost of the Medigap plan so that future medical expenses do not come up short.
Steve Chapman strives to remain current on all issues affecting the settlement of the case, including Medicare set-aside allocations, life care plans, medical cost trends, Long Term Disability, and Social Security issues.

Steven F. Chapman
National Settlement Consultants
12039 Jefferson Blvd.
Culver City, CA 90230
Phone: 800-845-2969
Fax: 310-450-3132
Cell: 310-480-5742
Email: SettleMan@aol.com
  Steve Chapman
 
Gregg Chapman has been a member of the State Bar of California for twenty years. Over the last eight years, he has worked for two of the largest national MSA vendors in various positions including General Counsel, National Sales Manager and Director of MSA Education. He has provided hundreds of presentations on all topics regarding Medicare Set-Asides to the insurance industry and attorney associations across the country.

Gregg Chapman
National Settlement Consultants
12039 Jefferson Blvd.
Culver City, CA 90230
Phone: 800-845-2969
Fax: 310-450-3132
Email: greggchap@aol.com

  Gregg Chapman