By law, Medicare is considered a secondary payer for injury, illness, or disease suffered by those involved in a workers’ compensation or liability lawsuit. As a result, Medicare does not have primary responsibility for covering a victim’s medical expenses until other responsible entities pay first. Parties primarily responsible for these payments may include those held liable for the victim’s injuries as well as group health plan insurance, liability insurance, no-fault insurance and/or workers’ compensation if applicable, according to the Workers’ Compensation Medicare Set-Aside Arrangements (WCMSA) guide created by the Centers for Medicare & Medicaid Services.
All parties in liability or workers’ compensation cases are responsible under Medicare Secondary Payer (MSP) laws to protect Medicare’s interests when resolving cases involving future medical expenses.
A Medicare set-aside (MSA) is a voluntary arrangement that demonstrates a good-faith effort to fund future care without relying solely on Medicare. Establishing an MSA is not mandatory, but it adequately protects Medicare’s interests while ensuring a person’s settlement is as beneficial to his or her future as possible.
Workers’ Compensation Medicare Set-Aside Arrangements (WCMSA) and Liability Medicare Set-Aside Arrangements (LMSA) vary on a case-by-case basis. A victim’s attorney(s) or an independent third party expert will determine how much money is sufficient to protect a victim’s future Medicare benefits.
The initial setup of a set-aside arrangement can be complex. Bank accounts must be established, health care providers must be notified, and claims must be properly paid and recorded.
There are also different funding options for Medicare set-asides, including funding with a lump sum or utilizing a structured arrangement. A structured arrangement, for example, requires an initial deposit (covering the first surgical procedure or replacement) and two years of annual payments. After the initial deposit, the structure allocates regular deposits over a certain period of time. After those funds are exhausted, Medicare will kick in and be the primary payer for further injury-related expenses during that designated period.
Beneficiaries can either elect to self-administer Medicare set-asides or retain a professional administration firm to handle this complex legal process. They can also connect with certain companies that will charge a small fee for a self-administration guide. The Medivest Medicare Set-Aside Self-Administration Kit, for example, provides the resources needed to self-administer a Medicare Set-Aside account – including how to properly hold and disburse MSA funds.
For those who have decided to set aside in either a WCMSA or LMSA, the decision to self-administer or retain professional assistance is one that should be made by consulting with an unbiased expert. A settlement planner can advocate for the solution that is best for the injured family member.
At Milestone, our settlement experts review clients’ individual situation and determine the best course of action. You’re not alone if you’ve received a liability or workers’ comp settlement and are exploring Medicare set-aside options. We can help.
A West Point graduate where he served as captain and military aviator, John Bair continues his commitment to our country through his efforts within the settlement planning industry. He has represented families of victims lost in the Flight 3407 crash, offered pro bono services to the families of 9/11 victims and drafted the first consumer protection bill for plaintiffs (H.R. 3699).