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John Bair
John Bair
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Will You Lose Benefits Without a Medicare Set-Aside?

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If you’re a Medicare beneficiary and are about to reach settlement in an injury case, you may be wondering how the incoming money will affect your benefits. After all, Medicare is a “secondary payer,” which means it does not have primary responsibility to pay for your medical care when another entity has the responsibility for paying first. By law, it is your responsibility as a beneficiary to protect Medicare’s interests. So, if you’re about to reach settlement, there’s a good chance you’ll need to take action to avoid losing benefits eligibility.

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Many personal injury plaintiffs work with their attorney and an expert to set up a Medicare set-aside (MSA), a fund that puts aside an amount of money that is sufficient to protect your future Medicare benefits. Simply put, an MSA is a voluntary arrangement that demonstrates a good-faith effort to fund your care without relying solely on Medicare. It demonstrates that you are not trying to extract undue funds from the Medicare system.

Four factors determine the amount of money to set aside in an MSA:

  1. The full value of your case if you went to trial or arbitration,
  2. The total amount of your settlement,
  3. The amount of your settlement that is allocated to future medical care, and
  4. How much Medicare-allowable  future care that you will need over your lifetime.

All MSAs are voluntary. However, they are the preferred method for accounting for payer issues per the Centers for Medicare & Medicaid Services (CMS).

Do All Personal Injury Settlements Require an MSA?

Not all settlements require an MSA. If a client is a Medicare beneficiary but no amount of the settlement is for future medical costs, or only past damages and wages are being recovered, an MSA is often not recommended.

On the other hand, if a substantial payment is made related to the accident, and the settling parties contemplate future surgery and/or other medical costs that are Medicare allowable, the plaintiff should speak with his or her attorney and a settlement planning expert about the possibility of setting up an MSA.

If you’re a Medicare beneficiary, proper settlement planning is key. Whether you are settling a workers’ compensation case or a liability lawsuit, it’s advisable to seek guidance early in the process to determine how you may need to protect Medicare’s interests. I welcome you to contact my settlement planning firm, Milestone Consulting, with any questions.

1 Comment

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  1. meredith warner md says:
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    Proper management and negotiation regarding medical, surgical and other expenses is hugely important. Too many of these are ‘self-managed’. I work with a group that provides large cost-savings for these clients; this protects their funding and Medicare longer. MSAtotalsolution

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