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A Perfect Guide for Workers’ Compensation and Medicare Set-Asides [2022]

Workers' Compensation Medicare Set-Aside (MSA) is an arrangement in which a portion of a workers' compensation settlement is set aside to pay for future medical care related to the injury. To help you understand, we assembled a perfect guide for workers' compensation and Medicare set-asides.

The MSA amount is placed in a trust or an insurance policy, and Medicare will pay no claims until the full MSA amount is exhausted. If the injured worker does not use all of the MSA funds, the remaining funds can be used to pay for other medical expenses or can be returned to the injured worker.

The MSA is a voluntary arrangement, but Medicare may refuse to pay claims if an MSA is not established. MSAs are complex, and it is important to seek the advice of a qualified professional to ensure that the MSA is properly established and funded.

Why It Matters So Much For Workers' Compensation Claimants

The Compromise and Release is the most common way to settle a workers compensation case. But when you are eligible for Medicare, you and the insurance company may need to set aside money for your future medical care. This process is known as obtaining a Workers' Compensation Medicare Set-Aside (WC MSA). Medicare needs to approve this arrangement, so your lump-sum workers' compensation settlement demands on it. In this blog article you will learn how the WC MSA process works and what to expect going forward.

When Is A Workers' Compensation MSA Required?

A Workers Compensation MSA is required when:

  1. An injured worker is eligible for Medicare health insurance;
  2. The injured worker settles his or her future medical care with a lump sum payment; and
  3. A lump-sum settlement of future medical care in workers' compensation cases is done through a form called a Compromise and Release.

Requirement to Notify Medicare

Workers' compensation insurance companies are required to report the settlement if the above facts exist. There is little in the way of getting around the MSA requirement unless the settlement is very small with minimal need for future medical treatment by all reasonable measures. Again, seek professional help if you are trying to accomplish a workers' compensation lump-sum settlement with Medicare Eligibility.

Why Is An MSA Required; What is the Purpose of an MSA?

When Is A Workers' Compensation MSA Required

When Is A Workers' Compensation MSA Required

The purpose of an MSA is to protect Medicare's interest in workers' compensation settlements. Medicare will not pay claims for medical expenses related to a work-related injury if an MSA has not been established.

An Workers Comp MSA is required because Medicare may be the secondary payer for medical expenses related to a work-related injury. The Medicare Secondary Payer Act (MSP) requires that Medicare only pays claims when there is no other insurance coverage available.

If an injured worker does not have an MSA and Medicare pays claims for medical expenses related to the injury, the injured worker may be required to repay Medicare. Injured workers who misallocate MSA funds entrusted for future medical expenses could similarly be refused coverage by Medicare.

A Perfect Guide for Workers’ Compensation and Medicare Set-Asides

A Perfect Guide for Workers’ Compensation and Medicare Set-Asides

How Is A Workers Compensation MSA Funded?

An MSA is funded with a lump sum payment from the workers' compensation settlement. The lump sum payment is placed in a trust or an insurance policy. The MSA must be funded with enough money to pay for all future medical expenses related to the injury. Medicare will only pay for medical expenses once the injured worker shows that they exhausted all the funds on injury-related medical expenses.

The MSA may also include a Medicare prescription drug plan. If the injured worker does not have a Medicare prescription drug plan, the MSA must be used to pay for Medicare-covered prescription drugs.

How Is A Workers' Compensation MSA Calculated

How Is A Workers' Compensation MSA Calculated

What Are The Medicare Set-Aside Arrangement Approval Process?

The MSA approval process is a voluntary process. The injured worker and the workers' compensation insurance company may submit an MSA proposal to Medicare for review and approval.

Medicare will review the MSA proposal to determine if the MSA is necessary and if the MSA is properly funded. Medicare will also review the MSA to ensure that it meets all of the requirements under the Medicare Secondary Payer Act.

How Long Does It Take For Medicare to Approve an MSA?

Medicare will review the MSA proposal to determine if the MSA is necessary and if the MSA is properly funded. Medicare will also review the MSA to ensure that it meets all of the requirements under the Medicare Secondary Payer Act.

Medicare says it will review the MSA proposal and make a decision within 60 days. This period can be extended by weeks and months on end when government agencies like Medicare take excessive time to complete the review. This is very frustrating for many people waiting for their workers' compensation settlement check. It can be held up waiting for approval by the Centers for Medicare Services (CMS).

What Happens If The MSA Is Not Approved?

If Medicare does not approve the MSA, the workers' compensation insurance company is not required to fund the MSA. Medicare may pay claims for medical expenses related to the injury if the injured worker does not have an MSA.

The Medicare Secondary Payer Act requires that Medicare only pays claims when there is no other insurance coverage available. If Medicare pays claims for medical expenses related to the injury, the injured worker may be required to repay Medicare.

Compromise & Release Settlement Blown Up

A failure of approval of the MSA means a delay in a workers' compensation lump-sum settlement situation. Seek professional help to get the process started earlier and avoid costly delays in for your job accident work injury claim.

How Is A Workers' Compensation MSA Calculated?

The future medical care for injured workers cannot be known until the date of Maximum Medical Improvement (MMI). MMI means that the worker has reached a stable position where nothing more can be done to improve function. Although future care may be necessary, no current course of treatment can increase the workers' functional capacity to work. The MSA for workers' compensation purposes is calculated by:

1. Determining an injured worker's life expectancy.

2. Projecting the cost of future medical care related to the injury.

3. Discounting the projected costs to present value.

4. Adding a contingency reserve, if Medicare coverage is not yet effective.

What Are The Tax implications of an MSA?

An MSA is a tax-free account. The money in the MSA can be used to pay for Medicare-covered medical expenses related to the injury. The money in the MSA can also be used to pay for Medicare prescription drug coverage. Always speak with a tax professional including a CPA and Tax Lawyer for advice in this area.

Meeting with an Experienced Workers' Compensation Lawyer

If you need assistance with a Workers' Compensation MSA, consider seeking legal counsel. An experienced lawyer can provide insight to how Medicare Set-Asides work, and what to expect. Contact 866-NAPOLIN to schedule a free consultation and secure representation for your case.