Examples of Financial Hardship in Waiver Determinations

50.14 – Examples of Financial Hardship in Waiver Determinations (Rev. 12438; Issued: 01-04-24; Effective: 02-06-24; Implementation: 02-06-24) Following are examples of determining financial hardship on a Medicare beneficiary: a) The beneficiary has spent the settlement proceeds and the only remaining income from which the beneficiary could attempt to satisfy Medicare’s claim would be from the money that is needed for the beneficiary’s monthly living expenses. Waiver may be appropriate under this aspect of the waiver criteria. If documented and appropriate monthly expenses consume the entire amount of money available, a full waiver may be warranted. A partial waiver may be appropriate if the beneficiary retains at least some (for example $25.00) discretionary income each month; b) The demonstrated beneficiary income and resources are at a poverty level standard, such as being in an SSI pay status. A beneficiary may demonstrate proof of SSI pay status by requesting the Form SSA-2458, Benefit Verification, from a SSA office. If Medicare’s claim would have to be satisfied from income and resources that meet an established level of poverty, waiver may be appropriate. However, preexisting financial hardship alone may be an insufficient basis for granting a waiver. All factors, not just the existence of poverty, must be weighed before a waiver decision can be made; or c) An unforeseen severe financial circumstance existing at the time Medicare’s claim comes into existence can also constitute financial hardship. If a beneficiary has become legally financially responsible for an unforeseen obligation, has acted in good faith at all times with respect to Medicare’s claim, and has no other financial resources to meet this legal obligation, waiver may be warranted. For example, waiver would be appropriate if a beneficiary’s grandchildren became the legal responsibility under a will or trust that came into existence upon the sudden death of the beneficiary’s child (the parent of the grandchildren). NOTE: The MSP Contractor should assume in all waiver examples that the attorney has already taken attorney fees from the settlement proceeds, and the beneficiary does not have to pay the attorney from the settlement figure shown. Also, it should assume that the settlement proceeds are being retained in an escrow account by the attorney and have not been spent. In cases where the funds have already been spent by the beneficiary, the beneficiary’s monthly financial situation and the likelihood of recouping the monies will be significant factors. In the following situations, Medicare’s full recovery would create the kind of financial hardship in which granting waiver would be appropriate. a) Facts: The beneficiary was injured in a slip and fall accident. A liability suit awarded a settlement of $4,500 to the beneficiary. The attorney’s fees were $1,500. The beneficiary incurred $1,700 in allowable, properly documented out-of-pocket medical expenses. The beneficiary is left with $1,300, but there will be future medical expenses that are not likely to be covered by Medicare. The beneficiary submitted documentation indicating Social Security benefits are received and there is still a monthly shortfall of $200. Medicare’s recovery after reducing for Medicare’s share of the beneficiary’s procurement costs is $537. Analysis: While Medicare’s claim is very small, so is the settlement. The money the beneficiary would use to repay Medicare could be used to pay the additional medical expenses and pay the beneficiary for out-of- pocket expenses. The beneficiary is already experiencing financial hardship. Medicare’s recovery would produce additional financial hardship. Action: Grant full waiver. b) Facts: The beneficiary sustained serious injuries from a fall on a bus. The beneficiary sued the bus company and received a settlement of $5,000. Medicare made conditional payments of $6,369. Attorney’s fees total $1,667. After reducing its claim to share in the beneficiary’s procurement costs, Medicare’s net conditional payments total $3,333. (When Medicare’s payments exceed the amount of the settlement, Medicare’s recovery becomes the amount of the settlement, less total beneficiary procurement costs). The beneficiary’s monthly income and expenses are equal. The beneficiary incurred non-covered out-of-pocket medical expenses of $3,000, of which $1500 is properly documented. Analysis: After reducing for beneficiary procurement costs, Medicare is entitled to recover $3,333.33, the remainder of the settlement funds. If the beneficiary repaid Medicare the total amount owed after reduction for beneficiary procurement costs, there would be no funds left with which to pay out-of-pocket medical expenses. Repayment to Medicare would create a financial hardship with respect to the out-of-pocket costs. Therefore, Medicare may further reduce its claim to avoid causing a financial hardship for the beneficiary. Action: Grant a partial waiver of the amount owed.