Developing a Medicare Set-Aside makes it easy for insurers to consider Medicare’s interests during workers’ compensation negotiations. Federal law requires that employers, group health plans, and insurance companies, consider the Centers for Medicare and Medicaid Services’ (CMS) interests during the settlement of workers’ compensation claims. There are several ways the parties may consider CMS’s interests during settlement, but the most common way is to establish a Medicare Set-Aside (MSA).
An MSA is, in effect, a fund developed to provide for future medical expenses. Insurers should consider using an MSA whenever a claimant’s injury is work-related; there are future medical expenses; and Medicare could possibly be responsible for paying for treatment. Medicare considers itself a possible payer whenever a claimant is a Medicare beneficiary and the workers’ compensation settlement amount is greater than $25,000. It also considers itself a possible payer when the settlement amount exceeds $250,000 and the claimant can reasonably expect to become a Medicare beneficiary within thirty months of settlement.
Insurers wishing to develop an MSA should use legal and medical experts to evaluate the claimant’s medical reports and cost analysis tables to determine the future cost of treating the work-related injury. Legal experts can then take this cost and cross-reference it with Medicare’s statutory guidelines to determine which aspects of treatment Medicare will cover. Once an amount is determined the insurer and the claimant should agree on this amount and earmark it in the settlement agreement to fund the MSA. After the resolution of the claim the insurer must disburse the agreed upon amount directly to the claimant or a third party financial administrator. After disbursement the claimant, or administrator, is responsible for depositing and managing the trust account funds.