Medicare and Medicaid Liens on a Colorado Injury Settlement

By the FigureMyTax Editorial Team · How we calculate

Colorado Medicaid (Health First Colorado) has an automatic statutory lien up to what it paid, to the fullest extent federal law allows, and it pays a reasonable share of your attorney fees, up to 25% of its lien. Medicare follows federal rules.

The automatic lien

When the state department provided medical assistance for which a third party is liable, it has an automatic statutory lien against any judgment, award or settlement, in an amount that is the fullest extent allowed by federal law but not more than the assistance provided (C.R.S. 25.5-4-301(5)(a)). No judgment, award or settlement is satisfied without first satisfying the lien, and a party that does not comply becomes liable for the full amount of assistance.

Attorney fees

When you bring the claim alone and owe attorney fees, the department pays its reasonable share of attorney fees, not to exceed twenty-five percent of its lien, and it is not liable for costs (subsection (5)(d)). On a $20,000 Medicaid lien, the reduction is at most $5,000, leaving $15,000.

Federal limit

The statute applies the lien to the entire settlement "regardless of how characterized," but only to the fullest extent federal law allows. In Arkansas Department of Health and Human Services v. Ahlborn (2006), the U.S. Supreme Court held that Medicaid may reach only the portion of a settlement that represents medical costs. How your settlement is allocated can therefore matter, so ask an attorney before agreeing to a payoff.

Notice and penalties

You must give the department written notice by personal service or certified mail within fifteen days after filing the action or asserting the claim (subsection (6)). Failing to do so makes the member, guardian, executor, attorney or other representative liable for the entire amount of assistance for the injuries, and the court awards the department its costs and attorney fees if it sues.

Medicare

Under the Medicare Secondary Payer statute, 42 U.S.C. 1395y(b)(2), the United States may bring an action to recover conditional payments and may collect double damages from responsible entities; 42 CFR 411.24 governs recovery. When Medicare's payments are less than the settlement, 42 CFR 411.37(c) reduces its recovery by its share of the procurement costs. On a $100,000 settlement with $36,333 of fees and costs, $15,000 of Medicare payments would shrink to about $9,550.

Next steps

Medicaid and Medicare are two of the claims on a settlement. See how hospital and provider liens work and Colorado's made-whole statute for insurers, then enter every claim in the Colorado medical lien calculator.

This is general information, not legal advice, and the state comparisons above are illustrative, not an exhaustive survey. Confirm how Colorado's rules apply to your specific case with a licensed Colorado attorney.