A Misunderstanding Leads to Huge Medical Bills for Real Estate Lawyer

Alyne Diamond, a real estate attorney, experienced a serious fall from her horse in August 2023, which resulted in a broken back. After the incident, she sought emergency care in Aspen, Colorado, and received a bill exceeding $100,000 from her employer-based health plan through UnitedHealthcare.

At the time, Diamond, who is now 67, was eligible for Medicare but had not registered for it. She assumed her employer’s health insurance would handle her medical expenses since she was still working.

Unfortunately, this misunderstanding has led to ongoing financial issues. More than a year post-accident, Diamond found herself back in the emergency room after tripping on a step at a New York restaurant, sustaining injuries that left her face bloody. The bill from that visit came to $12,000—but this time, her insurance coverage wasn’t straightforward. Almost all her claims were denied.

It turns out that individuals eligible for Medicare but still having group health insurance can sometimes end up financially responsible, particularly when group plans are suspended. Diamond reached out to multiple representatives at UnitedHealthcare to uncover why her claims were denied. When she turned 65 in 2022, Medicare became the primary payer for her medical expenses, meaning it should have covered costs before any other insurance stepped in.

If she had registered for Medicare upon turning 65, she might have avoided this dire situation, which is now forcing her to confront significant expenses. During her inquiry about the rejected claims, she learned that UnitedHealthcare had audited her claims and determined they had been incorrectly covering her care—likely because the high medical costs associated with her horse accident raised red flags.

Not only did they stop paying current claims, but they also moved to recover tens of thousands of dollars previously disbursed to healthcare providers over the last two years. Some providers are now pursuing payments from her directly.

“That’s terrifying,” Diamond remarked. “For about two months, I was beside myself. I kept thinking, ‘How will I afford to pay all these bills? It’s my retirement at stake.'” The mistake has already cost her $25,000, and if outstanding amounts are charged against her for care before she signed up for Medicare in February, it could get worse.

While a spokesperson from UnitedHealthcare declined to comment, patient advocates often hear from individuals like Diamond. Many don’t realize they need to enroll in Medicare when they turn 65, mistakenly believing employer insurance is sufficient.

This belief is often valid for those in companies with 20 or more employees. In those situations, employer insurance is the primary coverage, allowing delays in Medicare registration as long as they remain employed. However, if a person has employer insurance from a company with fewer than 20 employees, Medicare typically becomes the primary payer at age 65. Diamond’s law firm employs a small number of individuals.

Furthermore, if someone is 65 or older with retirement health benefits or opts to keep employer coverage through COBRA, Medicare will again pay first. This can apply to individuals under 65 who qualify for Medicare due to disability if they work for a company with fewer than 100 employees.

Those who miss signing up for Medicare when eligible can face significant financial burdens for their medical costs. They may also encounter penalties for late Medicare enrollment.

“It’s surprising, and unfortunately, there’s no quick fix at the moment,” said Fred Riccardi, president of a national patient advocacy group based in New York.

The Centers for Medicare and Medicaid Services did not respond to inquiries. Mark Schazer, a lawyer in Germantown, New York, noted that he regularly receives calls from people experiencing these issues, echoing Diamond’s experience.

He explained that significant medical claims often attract insurance companies’ scrutiny, leading them to investigate more closely. These large expenses “seem to catch the attention of insurers,” noted Casey Schwartz, a senior policy advisor.

In fact, UnitedHealthcare has reclaimed over $50,000 from services provided to Diamond in New York following her horse accident. She has personally covered about $25,000 so far. Some providers have agreed to bill her at Medicare rates.

However, potential future bills remain. New York State law permits healthcare plans to pursue payment from patients for two years for medical debt after a claim is paid, meaning Diamond could still receive more bills.

In response, she plans to sue the broker managing her health plans for negligence. “Medicare’s secondary payment rules basically state if you didn’t sign up because you weren’t aware that Medicare was the primary payer, that’s on you,” stated Melanie Lambert, a senior Medicare advocate.

Lambert mentioned she frequently sees similar cases. If enrolled individuals can prove misunderstandings with either employers or federal employees, they may qualify for relief or a special enrollment period.

Historically, people automatically received Medicare when they began collecting Social Security at age 65. However, for many, the process has become more complicated. Tricia Neuman of KFF highlighted that as more individuals delay their Social Security benefits, opportunities for mistakes grow, leading to potentially hefty consequences.

Experts on coverage have pointed out that there’s no clear obligation for insurers, employers, or the federal government to inform individuals about how benefit adjustments work when entering Medicare eligibility. Key information appears in the government’s “Medicare & You” handbook, but finding that can be tricky.

A simple solution might alleviate many of these complications, Scherzer suggested, since health plans know which individuals are turning 65. “Why not inform people about possible adjustments with Medicare? It would be so straightforward.”