If you’re a Medicare beneficiary and your personal injury lawsuit is about to settle, you may need to act quickly to avoid losing eligibility for benefits. For many, this means establishing a liability Medicare set-aside (LMSA). However, Medicare set-asides aren’t necessary for everyone after settlement. Below, we discuss when they’re appropriate and when they’re not.
What is a Liability Medicare Set-Aside?
There are two types of Medicare set-asides:
- Workers’ compensation Medicare set-aside arrangement (WCMSA), and
- Liability Medicare set-aside (LMSA).
The two types are largely similar, in that they are both a financial agreement that allocates a portion of a person’s settlement to pay for future medical services related to an injury, illness, or disease. Individuals can establish a WCMSA when they are going to receive money from a workers’ compensation claim. They can establish an LMSA when they will receive a personal injury settlement.
Do I Need to Establish a Liability Medicare Set-Aside with My Settlement?
Not all settlements require a Medicare set-aside. These funds are the U.S. Centers for Medicare & Medicaid Services’ (CMS) preferred method for overcoming primary payer issues (more on that topic here), but all MSA arrangements are voluntary.
An MSA is often not recommended if the plaintiff is Medicare-eligible but none of the settlement money is meant to cover future medical care, or only past damages and wages are being recovered in the settlement. On the other hand, an MSA might be helpful to maintain eligibility if some of the settlement proceeds are intended to cover injury-related expenses.
Although these scenarios seem cut and dry, it’s still best to make a final decision with the help of a professional. Consider consulting with a qualified settlement planner as early in the process as possible to determine whether an MSA is advisable. If an LMSA is the best option for you to comply with Medicaid, click here to read my post, “Complying with Medicare to Protect Your Insurance Coverage.”
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).