Medicare Secondary Payer Repayment and Plan Assets

[Guest NPWA]

Supposd that a self-insured group health plan has been informed by Medicare that Medicare paid primary on a claim when the plan should have paid primary. Medicare is seeking to recover the amount of the claim plus interest and the plan has decided not to contest it.

The plan is funded through a VEBA.

Now the question is whether the interest may be paid out of plan assets from the VEBA or must the employer/sponsor pay for it out of employer assets? I am assuming that the principal (the claim amount) may be paid out of the trust because it would have been in the first place.

The only remotely analogous authority I've found concerns payment of penalties for failure to file Form 5500 or penalties under the DOL's Delinquent Filer Voluntary Correction program, where the DOL has concluded that the plan administrator, not the plan, is required to pay the penalties.

I also reviewed the DOL's guidance from last year about use of plan assets (settlor v. plan functions), but found none of those hypotheticals useful.

Another potentially relevant fact is that the Medicare secondary payer statute and regulations gives the government the ability to sue either the employer or the plan to recover the mispaid claim.

Any thoughts would be greatly appreciated. Thanks in advance.