Speedy Medicare Set Asides and Re-Employment

A Medicare Set-Aside Arrangement (MSA) is the method designated by the Centers for Medicare & Medicaid Services (CMS) to be used when settling certain workers' compensation (WC) claims in order to be in compliance with the Medicare Secondary Payer (MSP) Statute: 42 U.S.C. §1395y(b)(2). The MSA is a portion of the WC settlement proceeds that is "set-aside" by the WC claimant to pay future medical expenses resulting from the industrial injury. The amount of the MSA is calculated to cover the work-related future medical expenses that would otherwise be paid for by Medicare. This amount is determined through the analysis of the medical reports and the claim payment history and should be sufficient to cover the claimant's estimated life expectancy

A WC settlement that meets the CMS Review Threshold must have the MSA reviewed and approved by CMS. However, under the MSP law, Medicare's interests must be taken into consideration when settling any WC claim. Thus, a MSA would also be appropriate in certain settlements even though CMS review is not required. Upon settlement of the workers' compensation claim, the MSA funds are to be placed in a separate interest bearing account and can only be used to pay for injury-related services that would otherwise be covered by Medicare. The rationale behind the law is to prevent attempts to shift the burden of medical expenses for work-related conditions to Medicare.

The consequences for failure to comply with the statute by not taking Medicare's interests into consideration can result in a claim by Medicare against any entity including the employer, insurance carrier or TPA to recover payment. CMS may recover double damages if it is necessary to take legal action to recover from the primary payer. In addition, failure to provide a MSA when appropriate could result in a loss of Medicare benefits to the injured worker.

When is it appropriate to complete and submit an Medicare Set-Aside to CMS?
CMS has established the following review thresholds to determine when it is appropriate to complete an MSA and submit it for approval to CMS when settling a Workers' Compensation (WC) claim that is closing out the future medical expenses:

1. The claimant is already a Medicare beneficiary at the time of settlement and the total settlement amount is greater than $25,000

-OR-

2. The claimant is not yet a Medicare beneficiary and both of the following are true:

1. The total settlement amount exceeds $250,000, and

2. The claimant has a "reasonable expectation" of Medicare enrollment within 30 Months* of the date of settlement.

When is it appropriate to complete an Medicare Set-Aside, but not necessary to submit to CMS?

1. The claimant is already a Medicare beneficiary but the total settlement amount is $25,000 or less.

2. The claimant is not yet a Medicare beneficiary but has a "reasonable expectation" of Medicare enrollment within 30 Months* of the date of settlement.

3. The claimant has a "reasonable expectation" of Medicare enrollment within 30 months. This includes but is not limited to the following:

a. The individual has applied for Social Security Disability Insurance (SSDI) benefits;

b. The individual has been denied SSDI benefits but anticipates appealing that decision;

c. The individual is in the process of appealing and/or re-filing for SSDI benefits;

d. The individual is 62 years and 6 months old (i.e., may be eligible for Medicare based upon his/her age within 30 months);

e. The individual has an End Stage Renal Disease (ESRD) condition but does not yet qualify for Medicare based upon ESRD.