Workers’ Compensation: The Medicare Set-Aside Arrangement: When is One Needed for Settlement?
By Carol D. Strassman The Medicare Secondary Payer (MSP) statute has been in place since 1980. The concept of a Medicare Set-Aside Arrangement (MSA) was not adopted by the Centers for Medicare and Medicaid Services (CMS) until 1995. Medicare is federal health insurance for those over age 65 and for certain disabled persons receiving Social Security disability.
The basic premise is that Medicare will remain a “secondary payer” if a primary payer, i.e., workers’ compensation, exists. CMS expects to be put on notice of workers’ compensation claims where the claimant is or will soon be a Medicare beneficiary.
Medicare is concerned that liability for work-related injury medical expenses should not be shifted to Medicare. This is because most settlements forever close the claimant’s right to future medical treatment through a workers’ compensation claim. Thus, a portion of the workers’ compensation settlement must be set aside to pay for the claimant’s future work-related medical expenses. Medicare will not pay for work-related medical expenses until the set-aside amount is exhausted.
An MSA is an account which allocates a portion of the workers’ compensation settlement for future medical expenses. Medicare’s interests must always be considered when settling any workers’ compensation claim. The following is the CMS review threshold for an MSA:
- The claimant is currently a Medicare beneficiary and the total settlement is greater than $25,000; or
- The claimant has a “reasonable expectation” of Medicare enrollment within 30 months of the settlement date and the settlement is greater than $250,000.
We must consider Medicare’s interests in all workers’ compensation settlements. The formation of an MSA can be a complex and involved issue. The MSA proposal must be approved by CMS. This process can take one to six months, or even longer.
The MSA funds must be placed in an interest-bearing account separate from the claimant’s personal savings or checking account. The funds shall be used solely for medical expenses related to the work injury which otherwise would be reimbursable or paid by Medicare. Failure to abide by the regulations, including approval from CMS, can expose the BWC, employer, claimant, and counsel to double damages.
The bottom line is to remember that Medicare’s interests must be considered when settling any workers’ compensation claim. The CMS review threshold should be reviewed to determine if an MSA is required in a settlement. Do not hesitate to contact Carol Strassman or any of the workers’ compensation attorneys at RBS with any questions or concerns regarding an MSA, or for assistance in structuring the settlement of a workers’ compensation claim.
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