by John Darer® CLU ChFC MSSC CeFT RSP CLTC
Can Affordable Care Act Medical Plans be a Collateral Source to Help Reduce Awards for Future Medical Damages in New York?
Tackling this question in a column published in the Westchester Business Journal, New York medical malpractice lawyers Gerard Heubel and James Kachadoorian say that “while gaining judicial acceptance of a collateral-source reduction of future medical expenses will not be easy, the defense bar is up for the challenge. Defendants must be prepared to present experts on insurance coverage issues, especially those related to the ACA, at collateral-source hearings to establish by clear and convincing evidence that it is highly probable that the plaintiff’s future medical expenses will continue to be paid by insurance coverage that he/she is mandated to have under the ACA. Identifying a specific insurance plan and demonstrating precisely what care the plan will cover are necessary”.
New York courts have consistently held that it is a defendant’s burden to prove by “clear and convincing evidence” that it is highly probable that the plaintiff’s future medical expenses will be paid by a collateral source. Prior to the ACA, this was a difficult burden to overcome.
Going back over 25 years, New York courts have routinely found that the continuation of health insurance coverage is not assured, citing for example the possible loss of coverage connected to employment, refusal of insurers to insure individuals for preexisting conditions and divorce from or death of the spouse who was the primary insured.
For example, in EVAN GIVENTER, an Infant, by His Mother and Natural Guardian, DONNA GIVENTER, et al., Plaintiffs, v. JOSE L. REMENTERIA et al., Defendants 705 NYS 2d 863 184 Misc. 2d 744 (2000), the court reasoned in denying the reasonable certainty of the collateral source:
1. No assurances Health insurance benefits will only be received if she continues in her current employment and her employer continues to provide the insurance
There can be no assurances that the insurance will continue to benefit her son, Evan. If Mrs. Giventer lost her job or the employer or insurance company changed the benefits, those factors would be beyond her control.
2.Cannot be forced to work
Moreover, by reducing Evan’s award based upon insurance his mother has through her job would force Mrs. Giventer to continue at her current employment without regard to her personal and professional goals and desires and irrespective of what is best for her and the rest of her family. Mrs. Giventer has a right to change jobs or stop working altogether. No one can force her to have to work. Treating her employee health insurance as a collateral source would require her to work in order to provide her son with the care which he requires which a jury has already found the defendants are obligated to provide.
3. Cannot force the plaintiff to buy insurance
In Giventer, the defendant’s rehab expert could not prove that an HMO policy (then available a guaranteed issue basis via Blue Cross of NJ) Insurance which the plaintiffs do not have can never be reasonably certain to replace what the jury awarded and cannot be considered a collateral source offset.
How Proponents Argue the Affordable Care Act Changes Things
1. The ACA, which requires nearly everyone, with few exceptions, to obtain health insurance, squarely addresses most of the courts’ concerns and establishes that it is highly probable that a plaintiff’s future medical expenses will be covered by health insurance.
2. Given the ACA’s success in withstanding constitutional and other legal attacks, it is expected to continue in force and effect, further supporting the argument that defendants should be entitled to secure a collateral-source reduction in the cost of future medical care paid by health insurance
The table for the debate was set in 2013 when in the New York Court of Appeals case, “Caronia v. Philip Morris,” the dissenting opinion made reference to the possibility that under the ACA there may be the potential for a collateral-source setoff
Heubel and Kachadoorian state that “one potential obstacle to “the ACA argument” is related to plaintiffs who receive Medicaid and may therefore be exempt from buying health insurance under the ACA because their income is so low. Because Medicaid has a statutory right to reimbursement, future medical expenses paid by Medicaid will not reduce a jury award for those specific costs.
Under those circumstances, it may be wise for defendants to offer to pay the plaintiff’s ACA insurance premium. Plaintiffs have always had the obligation to mitigate their damages, so once a defendant agrees to pay an insurance premium, there is no legitimate reason for the plaintiff to insist on receiving Medicaid reimbursement for future medical care.
Buying Medical Insurance as a Solution?
1. Medical insurance under the Affordable Care Act is not Long Term Care Insurance and thus it would be difficult to argue that a plaintiff who needs, or may need long term care services or institutions would be able to mitigate all of it with the insurance. Perhaps some can be mitigated. While there are creative solutions to deal with long term care needs available, they would depend on the insurability of the plaintiff and would not be considered a collateral source.
2. Medical insurance premiums have not stayed static through the course of history.
In New York, ACA Marketplace premiums are projected to rise by an average of 13.2% in 2026, marking one of the steepest increases in recent years. This spike is driven by several factors:
- Medical inflation: Rising costs for hospital services, prescription drugs, and provider reimbursements are major contributors.
- Expiration of enhanced subsidies: The end of expanded tax credits from the American Rescue Plan is expected to raise premiums by 4.5% alone.
- Regulatory changes: New federal rules and state-mandated benefits (like biomarker testing and network adequacy) are adding pressure.
- Risk adjustment dynamics: ACA’s Federal Risk Adjustment program helps balance costs across insurers, but changes in its impact are influencing rate filings
Source: ACASignups.net July 19, 2025
Financing Medical Premiums With Structured Settlement Annuities
Financing a lifetime of medical insurance premiums via structured settlement payment streams is another challenge. As it stands today, it is impossible to match historical rate increases in medical insurance premiums with a structured settlement annuity. The maximum COLA is capped at 5-6%, but low interest rates make most COLAS not cost efficient.
The use of an indexed linked payment structured settlement such as that offered by Pacific Life and Annuity in New York might help somewhat, but at present there is a 5% cap. Priced at approximately a 2.3% COLA, there is some upside with no downside. But it won’t get you all the way there.
Pacific Life expects to introduce a much improved Index Linked structured settlemet annuity targeted for the end of Q1 2026, pending receipt of a pair of IRS Private Letter Rulings
Heubel and Kachadoorian are partners at the White Plains New York office of Wilson Elser Moskowitz Edelman & Dicker, LLP.
2024 Update
On appeal to the New York Appellate Division Second Department, “that branch of the defendant’s motion which was pursuant to CPLR 4545 for a collateral source hearing on the issue of future medical expenses is granted, the order dated October 25, 2019, is modified accordingly, and the matter is remitted to the Supreme Court, Kings County, for a collateral source hearing pursuant to CPLR 4545 on the issue of future medical expenses and a determination as to any collateral source offsets to which the defendant may be entitled, and for the entry of an appropriate second amended judgment thereafter“.
Last updated January 18, 2026