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Successful injury claim? Check if you owe Medicare or Centrelink

When a personal injury claim settles, it can be a huge relief. What is usually a trying claims process has finally come to an end. However, it is important to note that there are a few steps to finalise with your legal team before a settlement is received.

Once your claim settles with the insurer, there are Federal Government departments that may require compensation recovery.

Here we explain what you may need to pay back to Medicare after settlement, whether you have to declare compensation to Centrelink and whether it will affect your payments.

Want personalised advice? Contact Stephen Browne lawyers today to find out more.

Can Medicare take my settlement money?

Yes, Medicare is entitled to a portion of your settlement money. Here’s why.

Throughout your claim, the cost for any medical appointments to treat your condition and assess your recovery is charged through Medicare. As Medicare absorbs this cost upfront, it is a settlement requirement that any funds owed are reimbursed at the finalisation of your claim.

A Medicare claims history statement can be requested to identify any charges made to Medicare in this period. This is a record of all the medical appointments made throughout your claim. Notice of charge will generally be provided which outlines the total cost owed.

Paying back Medicare after settlement – what do I need to know?

Due to the significant delays with Medicare processing, it is becoming more common that a current charge at the time of settlement is unavailable.

If no current charge is provided, then the insurer is obligated to forward 10% of the total settlement of your claim to Medicare until the recovery amount is confirmed.

If this happens you will receive your settlement in up to three payments:

  1. First payment – payment of a large portion of your settlement monies (calculated by your total settlement less 10% and any costs contribution);
  2. Second payment – payment from Medicare  (the balance of charges from the 10% that the insurer forwarded);
  3. Third payment (only if the insurer has provided an indemnity to repay) – from the insurer after Medicare settlement with any residual owed back to you.

How long will it take to receive my final settlement?

In most cases, your initial payment will be received fairly quickly. However, the second and third payments can be delayed depending on processing time at Medicare. If this is the case your legal team will follow up regularly to reduce the delay.

Does compensation affect Centrelink payments?

Yes, if part of your damages awarded includes payment towards economic loss then Centrelink may have an interest.

If the amount of your damages include a contribution for an inability to work due to your injuries for the same (or similar) period that Centrelink was paying you entitlements, then Centrelink may need to be repaid the amount of the benefits you received from them in that period. This is because you cannot be compensated twice for the same loss.

Once a settlement is reached, Centrelink may recover payment in one of the following ways:

  1. Preclusion period: If you are still on Centrelink they may preclude your payments for a period after settlement.The preclusion period is calculated as follows: 50% of the total settlement sum divided by $850 (approx.) = number of weeksExample – total settlement of $100,000$100,00 ÷ 2 = $50,000 x $850 = 58.82 weeksThe number of weeks is calculated from the date of the accident and if this period has been served, then your payments will likely not be precluded.
  2. Recovery – the above calculation is used to determine the maximum period of monetary recovery from Centrelink.Therefore, in the above example, the maximum recovery would be your weekly net Centrelink entitlement payment rate x 58.82 weeks.Example – if you receive $240 net per week from Centrelink$240 net x 58.85 = $14,124.00 maximum recoveryHowever, if you only received Centrelink payments for a brief period after your accident, then the maximum Centrelink can recover would be the total of those net payments.

Can you estimate the cost to Centrelink before settlement?

Unfortunately, we are unable to obtain an estimate or confirm with Centrelink before settlement your potential preclusion period or recovery amount.

Once your matter is settled, the insurer must request confirmation from Centrelink.  Therefore, we are only able to provide estimates of the above at the time of settlement.

Have questions? Contact our experienced motor vehicle accident lawyers

If you’ve suffered an injury after an accident on the road, you should be able to focus on your recovery. Our expert motor vehicle accident lawyers will help to make the legal journey as simple as possible while maximising your entitlements. If you have any questions about your no-win no fee motor vehicle accident claim, contact Stephen Browne Lawyers today.

2023-09-05T08:59:56+00:00 October 6th, 2022|Blog, motor vehicle accident|0 Comments