I would like to see if anyone may know the answer to this question. I'm my mom's P.O.A.; she's in a nursing home facility. She was in another previous her present one, where she was abused. I brought suit against that facility, and we settled out of court. I myself am on disability due to x2 cancer related illnesses and many others to follow; I owe back taxes since I've been on disability from taxes I filed before I became disabled. I would liked to know could the IRS take the settlement I received on my mom's behalf from the nursing home facility that was settled?
Good luck,
Carol
The attorney who settled this matter should have advised you as to the proper handling of the settlement. Was the nursing home stay being paid by Medicare and/or Medicaid at the time? If so, one or both may be entitled to a portion of the settlement. Is mom on Medicaid now? Depending on the character of the award (e.g., medical costs, pain and suffering, punitive) all or part may be considered a countable asset with respect to Medicaid eligibility. I would suggest first speaking to the attorney who handled the case.
If your mom was on Medicare and got a settlement, then all the $ is subject to The Medicare Secondary Payer Act (MSP), which is about Medicare being reimbursed for any payments they made for medical expenses for a Medicare covered individual in which another individual, business or other entity was later found responsible for and made a financial settlement to the Medicare covered individual. The regs on this came out on this in 2012. It's going to be a nightmare for self-insured's to comply with.
For your mom, what the medical charges total, what Medicare paid for and what the settlement paid to her is critical to determine how much everyone gets, this is why you need to see the attorney who handled the claim or lawsuit. It may be that the attorney will need to set up a trust account (kinda like how earnest $ is held when you buy a house) that the $ in the settlement goes to; and from that due to Medicare comes from and is not released to your mom until Medicare sends her attorney a letter that the reimbursement is settled in full and then the balance released to her. If an attorney wasn’t involved, then you would need to contact Medicare & the compliance dept of the insurance company who paid the claim.
If there is $ left over after this, it should be considered income and if your Mom is on Medicaid, then this $ will probably have her ineligible for Medicaid payment of her NH until she has spent down to the 2K in assets (or whatever her state has as the ceiling for assets). If she is now deceased, it could become a MERP claim or lein against her estate.
IMHO you need to keep all the paperwork on this and be proactive to deal with it as there seems to be increasing crackdown on compliance of Medicare & Medicaid reinbursement rules. Good luck.