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John Bair
John Bair
Contributor • (716) 883-1833

Can Medicare Deny Payment if an MSA Isn’t Set?


A Medicare Set Aside (MSA) is an amount of money that you and your attorneys, or an independent 3rd party expert, determines is sufficient to protect your future Medicare benefits. This term is used in Centers for Medicare Services (CMS) memorandum only, not regulation or law, and it basically refers to a process of determining what the government’s, or the Medicare Trust Fund’s interest is in your lawsuit or claim.

Essentially, an MSA is a voluntary arrangement that demonstrates a good-faith effort to fund your future care without relying solely on Medicare. By establishing an MSA, you are signaling to CMS that you are exercising due diligence in your settlement and not trying to extract undue funds from the Medicare system. This will protect your Medicare rights and ultimately ensure that your settlement is as beneficial to your future as possible.

However, not all settlements require an MSA, and thus, you or your loved one may not have one. I’m often asked by clients without a Medicare Set Aside what happens if they are receiving Medicare but no payments were made related to the accident, and 10 years down the road, they require a medical procedure or surgery? Can Medicare deny payment?

The short answer is yes. Medicare can deny payment. But of course, there are some grey areas…
If a client is Medicare eligible, but no amount of the settlement is for future medical, or only past damages and wages are being recovered, most likely an MSA is not recommended.  If significant payments are made related to the accident, and the settling parties contemplate a future medical costs that are Medicare allowable(that would typically be covered by Medicare), the plaintiff should consider whether an MSA is advisable.  Medicare can deny payment if some part of the settlement was allocated to cover the future surgery, and no effort is made to “adequately consider the government’s interest” Whether you are settling your workers compensation case, or a liability case, or a case involving your employer(and their comp carrier) and other 3rd parties, it’s advisable to seek guidance early in the process to determine what, if anything should be done.

The amount of money set aside is also a critical question.  4 major components determine what amount is appropriate.  1. Full value of your case if you went to trial or arbitration, 2. The amount of the settlement, 3. the amount allocated to future medical, and 4. how much future medical treatment that is Medicare allowable is needed over your lifetime.  If you are intent on establishing an MSA as part of your settlement, Medicare uses CDC Table 1 to determine life expectancy. To determine whether or not you’ll need an MSA, it’s important to recognize, that all Medicare Set Aside (MSA) arrangements are voluntary, however they are the preferred method for accounting for primary payer issues, see Center for Medicare Services (CMS).

An MSA may be funded with cash or an annuity pursuant to current CMS guidance.  In long term, catastrophic injuries where the future cost of care is significant, your MSA expert will be best to advise you on how to reduce the amount of the allocation using all of the available sound actuarial processes in use that companies that work solely for plaintiff and claimants will advise you of.

Structured Settlement Brokers introduced to the negotiation by the comp carrier do not have any duty to the claimant of plaintiff.  They work solely for the comp carrier, and will only be compensated if your MSA is funded by a structured annuity.  These arrangements are irrevocable, and all of your options should be explored before you make a decision.

If your attorney is suggesting an MSA, or the workers compensation carrier is mandating that one be set up, you should research your rights.  Its your Medicare, and the funds that go into an MSA is rightfully your property that you are recovering as part of your settlement from  your injury.  You are entitled to your own expert and representation.  Think for example if $50,000 is allocated to your MSA, and then you either die, or return to work, what happens to that money?  Unless a plaintiff/claimant loyal planner was involved, it may revert to the comp carrier, or an insurer.

Take a look at the article hyperlinked above, and if you have more questions or you’re still unsure about your particular settlement situation, feel free to give us a call at 716.883.1833 or send us an email at info@milestoneseventh.com.


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    Excellent article John. Keep up the great work helping injured people manage settlements.

    • John Bair says:
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      Thanks Joe. I appreciate the comment. Plaintiff’s have a tough road ahead when they get to settlement. It’s great to get to be there advocate.

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