When someone dies from an injury another party caused, Medicare has a right to be repaid from the wrongful death settlement for any care it paid for that was related to that injury. This is the basic rule behind Medicare liens in wrongful death settlements, and it comes from the Medicare Secondary Payer Act, which treats a liable party’s settlement as the primary source of payment for injury-related medical costs. How much Medicare actually collects depends on how the settlement is written, what Medicare actually paid for, and whether the family uses the reductions and options built into the process.
What Part of the Settlement Medicare Can Reach
Medicare’s lien does not attach to the whole settlement. It attaches only to money paid for medical treatment related to the fatal injury, and the way the settlement is divided controls how much of the recovery falls into that bucket.
Two different claims typically get resolved together. A survival action belongs to the deceased person’s estate and covers what the person experienced before death: medical bills, lost wages, pain and suffering. A wrongful death claim belongs to the surviving family members and compensates them for their own losses, such as lost financial support and companionship. Medicare’s lien targets the medical-expense component, which sits inside the survival action.
In most states these are independent claims, which means a settlement that clearly allocates money between the two can sharply limit what Medicare can touch. If most of the proceeds are assigned to the wrongful death claim and a smaller portion to the survival action, Medicare can only recover from the survival-action share. A few states treat wrongful death as an extension of the estate’s claim, effectively merging them, and in those jurisdictions Medicare may argue its lien reaches more of the settlement.
The practical point: wording matters. A settlement that makes no allocation invites Medicare to treat the entire amount as available. An agreement that spells out the breakdown gives the family a much stronger position.
When Medicare Will Not Pursue Recovery
Not every settlement triggers a recovery effort. CMS has a minimum threshold for physical trauma-based liability settlements: if the total settlement is $750 or less, insurers are not required to report it and CMS will not pursue recovery. This threshold does not apply to cases involving alleged ingestion, implantation, or exposure.1Centers for Medicare & Medicaid Services (CMS). 2026 Recovery Thresholds for Certain Liability Insurance, No-Fault Insurance, and Workers’ Compensation Settlements
How the Lien Gets Resolved
Resolution runs through the Benefits Coordination & Recovery Center (BCRC) and typically stretches over months. The claim should be reported to the BCRC when the wrongful death case is opened; the liability insurer or self-insured entity separately reports the settlement to CMS under Section 111 of the MMSEA.2Centers for Medicare & Medicaid Services. Medicare’s Recovery Process3Centers for Medicare & Medicaid Services (CMS). Mandatory Insurer Reporting (NGHP)
The BCRC then issues a Conditional Payment Letter that lists the charges it believes are related to the injury, along with a dollar amount. Read it carefully. The BCRC casts a wide net, and the list often picks up charges for unrelated conditions. Unrelated charges can be disputed through the Medicare Secondary Payer Recovery Portal or by mail or fax, and the BCRC will adjust the amount for anything it agrees should come off.4Centers for Medicare & Medicaid Services. Conditional Payment Information
Once the settlement is finalized, the details go to the BCRC, which reviews for any newly identified related claims and then issues a formal recovery demand letter with the final amount owed. Payment is due within 60 days of the date on that demand letter.5Centers for Medicare & Medicaid Services. Conditional Payment Letters and Notices – Beneficiary
How to Reduce the Amount Owed
The demand letter figure is not necessarily final. Several tools can bring it down.
Procurement Cost Reduction
Federal regulations require Medicare to reduce its recovery in proportion to the legal costs that produced the settlement. If attorney’s fees and litigation costs equal 40% of the total settlement, Medicare cuts its claim by 40%. So a $20,000 conditional payment total drops to $12,000 when procurement costs run 40%. The BCRC applies the reduction when issuing the demand, provided it has the settlement breakdown showing the fee arrangement.6GovInfo. 42 CFR 411.37 – Amount of Medicare Recovery When a Primary Payment Is Made as a Result of a Judgment or Settlement
The Fixed Percentage Option for Small Settlements
For smaller liability settlements, CMS offers a streamlined alternative. Under the fixed percentage option, the beneficiary pays a flat 25% of the total settlement to Medicare as full satisfaction of the lien, no matter what Medicare actually spent on conditional payments.
To qualify, all of the following must be true:
- The settlement involves a physical trauma-based injury, not ingestion, exposure, or a medical implant.
- The total settlement is $10,000 or less.
- The request is submitted before or at the time the settlement documentation is sent to the BCRC. If a Conditional Payment Notice has been issued, the request must be made within 30 days of that notice.
- Medicare has not already issued a demand letter for the incident.
- The beneficiary has not received, and does not expect to receive, any other settlement or payment related to the same incident.
The option pays off when actual conditional payments exceed 25% of the settlement. When they are lower, the traditional process produces a smaller bill.7Benefits Coordination and Recovery Center. What Is the Fixed Percentage Option?
Waiver and Compromise
A waiver asks Medicare to forgive the debt. Federal regulations allow one when the person who received the overpayment was without fault and repaying would either defeat the purposes of the Medicare program or be against equity and good conscience. In practice this covers situations where repayment would leave the family unable to afford basic living expenses.8eCFR. 42 CFR 405.358 – When Waiver of Adjustment or Recovery May Be Applied
A compromise is different. It offers Medicare less than the full amount rather than asking for forgiveness, and may fit when the settlement was small relative to actual damages or when other equitable factors make full repayment unreasonable. Both requests need detailed financial documentation and a written explanation, and compromise requests can be submitted through the Medicare Secondary Payer Recovery Portal.9Medicare Secondary Payer Recovery Portal. Compromise Request
Neither request stops interest from accruing while it is pending.2Centers for Medicare & Medicaid Services. Medicare’s Recovery Process
Disputing the Demand Amount
If the demand letter is wrong or lists charges that should not be there, the formal appeals process has five levels. The first is a redetermination by the Medicare contractor, and the request must be filed within 120 days of receipt of the initial determination. The notice is presumed received five calendar days after its date.10Centers for Medicare & Medicaid Services. First Level of Appeal: Redetermination by a Medicare Contractor If that does not resolve the dispute, the remaining levels are reconsideration by a Qualified Independent Contractor, a hearing before the Office of Medicare Hearings and Appeals, review by the Medicare Appeals Council, and judicial review in federal district court. Most disputes end in the first two levels. Filing an appeal does not stop interest from accruing.11Centers for Medicare & Medicaid Services (CMS). Original Medicare Appeals
What Happens If the Lien Is Ignored
Ignoring the lien is the most expensive mistake available in this process. The statute lets the federal government collect double the amount of conditional payments from any entity that was responsible for reimbursing Medicare and did not. A $30,000 lien can become a $60,000 judgment.12Office of the Law Revision Counsel. 42 U.S. Code 1395y – Exclusions From Coverage and Medicare as Secondary Payer
Short of double damages, consequences escalate on a predictable timeline. If the full amount is not paid within 60 days of the demand letter, interest starts to accrue. If the debt stays unresolved, the BCRC can refer it to the Department of the Treasury for collection, which opens the door to administrative offset, wage garnishment, and referral to the Department of Justice for litigation.13Centers for Medicare & Medicaid Services (CMS). Medicare Overpayments Fact Sheet
The government does face a time limit. An action to recover conditional payments must be filed within three years of the date the government receives notice of the settlement.12Office of the Law Revision Counsel. 42 U.S. Code 1395y – Exclusions From Coverage and Medicare as Secondary Payer
A Note on Medicare Advantage
Everything above describes Original Medicare (Parts A and B). If the deceased was enrolled in a Medicare Advantage plan, the plan has its own recovery rights that work similarly but are handled directly by the private insurer rather than through the BCRC. Federal courts have increasingly recognized that Medicare Advantage plans have the same statutory right to recover conditional payments as Original Medicare, based on cross-references between the Medicare Advantage statute and the MSP Act. The recovery process, timelines, and negotiation leverage vary by plan, and the family or attorney will typically deal with the plan’s own recovery department instead of a centralized government portal.