Life Care Plan and MSA Analysis

Posted by Sylvius Von Saucken

Question:
[I have a liability case where] there is a sizeable life care plan for future medical care costs. Does that in and of itself mean we need to do a MSA analysis?

Answer:
Not necessarily. The life care plan tells us the picture of future costs of care. It is a redacted life care plan that would tell us what Medicare would pay for out of that life care plan. The issue here is the following formula:

FCC+PBS = MSA (where FCC = Future Cost of Care; PBS = Permanent Burden Shift, and MSA = evaluate the need for a MSA/do an MSA report).

Here, there may not be a question that FCCs exist, but since this is a liability case, the question is how much of the settlement was actually allocated to FCCs. In other words, life care plans to argue numbers for settlement is not the same as settling a case where you allocate a specific part of the settlement to pay for FCCs.

Equally, if not more importantly here – is there a Permanent Burden Shift over to Medicare. You can have a $30 million life care plan, but if Medicare is not going to pay for any of it (because the person will not become a Medicare beneficiary, at least for the reasonably anticipated period of time), then the formula does not result in an MSA report needing to be done. Instead, the formula tells us to properly document the file showing that we considered Medicare’s interests and did not find FCC+PBS = MSA.