This is no fun, so I’ll get right to the point: Certain workers’ comp settlements have to give Medicare part of your money. It’s called a Medicare Set-Aside (MSA). This is the money Medicare “sets aside” to pay for future treatment related to your work injury. When that money’s gone, Medicare pays from then on.
Before I give you the basics on dealing with an MSA, let me tell you the one thing you need to know about Medicare: you don’t mess with these people.
If Medicare wants money out of you, they’ll likely get it one way or the other. And they will sue everyone involved to do it—you, the insurance company, the attorneys from both sides—assuming you have one, and anyone else they can possibly accuse of wrongdoing and not getting them their money.
Now that I have warned you, let’s dive in.
Who Does an MSA Apply To?
If you need an MSA, you have to submit it for Medicare’s consideration and approval.
You only need an MSA if:
- You’re already on Medicare and your total settlement is over $25,000.00, OR
- You reasonably expect to be on Medicare within 30 months of settlement AND the total settlement is over $250,000.00, regardless of whether it’s labeled as future medical care, disability, or lost wages.
What does “reasonably expect” mean here? It could mean you expect to be on Social Security disability not long after the settlement since Social Security disability recipients are eligible for Medicare after 24 months. But sometimes it can take years to get Social Security disability, even if you apply immediately.
By the way, if Social Security disability is even a remote possibility following your workers’ comp case, you need to make sure your workers’ comp settlement won’t have the unexpected effect of actually lowering your Social Security benefits.
If neither condition applies to you, you don’t need to worry about an MSA.
What Do You Do if You Might Need an MSA?
You’ve got to submit the required information to Medicare, including the proposed amount to set aside. Then, you wait for approval.
Medicare expects highly detailed information, including:
- The amount of medical bills paid by workers’ comp, even after your condition stabilized. This gives Medicare away to estimate how much you will cost them in the future, so they can set aside what they consider a proper amount.
- The amount of the settlement. A skilled lawyer can help show how much of the settlement is divided between lost income, disability and medical benefits, which could help keep the set aside amount as low as possible.
- Whether the settlement is expected to last your lifetime or a limited time. No need to hide the ball here—settlements need to be designated to last your lifetime, or it will look like you just got a giant windfall. Medicare doesn’t like windfalls.
- Whether the proposed Medicare set aside amount is enough. This is the most complicated aspect, and it may require a wise attorney to hire an expert to justify that amount, hoping to keep it as low as possible for you. Medicare expects complications from injuries to be accounted for—like unexpected hospital stays. One example Medicare gives in its own guidance is a paralysis victim developing ulcers requiring possible surgery, or getting urinary tract infections, kidney stones, or even pneumonia. Medicare recommends obtaining average annual amounts spent by Medicare on a disabled person in your state.
How do you get them the information? Often the workers' comp insurance company handles this for you. But if you end up handling it, the quickest way is through an internet portal, which your attorney should have access to. That makes communication between you and Medicare go tremendously faster—which still isn’t fast enough. We are dealing with an arm of the federal government here.
How Does an MSA Affect Me?
Simply put, every dollar Medicare gets is one you don’t.
Additionally, if you're given responsibility for managing the MSA, you not only have to keep track of the money, you also have to file reports with Medicare every year proving the money you spent from the Set-Aside. For the smart Medicare recipient, that means a separate bank account for the money and a notebook filled with medical bills, doctor reports, and proof of payment from the separate bank account. Yeah, it's a lot.
An experienced attorney can help you create a settlement to maximize your financial recovery and satisfy Medicare. Experienced attorneys also have access to other resources, like experts who can give a legitimate and uninflated estimate of how much money the Medicare set aside should contain, so you get more money to help you recover financially from overdue bills and the loss of income for potentially a lifetime.
Speaking of resources, to get more educated on your case, download our FREE BOOK on workers' comp cases. For more immediate personal contact, you can also call toll free at 888-230-1841 or fill out a Get Help Now form.
If you’re wondering what it’s like to work with us, check out reviews from people who hired us, and even people who didn’t.