Medicare set-aside: allocations in workers’ compensation claims

This may become an issue when a workers’ compensation settlement covers future medical services. In negotiating a lump sum settlement or structured settlement, it is often necessary to anticipate and set aside money to fund a Medicare Set-aside (MSA) account.

MSA accounts

Medicare set-asides are accounts used to pay future medical costs for those with serious workplace injuries. The Centers for Medicare and Medicaid Services (CMS) seek to recover reimbursement for the cost of future medical treatment if the beneficiary recovers from another source – workers’ compensation, for example.

CMS can assist with review and approval through the Medicare Secondary Recovery Portal. The review process is voluntary for workers’ compensation cases.

Medicare does not generally cover medical expenses until an individual fully depletes the MSA account. For a worker nearing retirement age this can be important in calculating a fair settlement. The rationale underlying the MSA accounts is to protect the government from paying for medical bills when the injured individual received money from another source.

How is the allocation amount determined?

Some of the considerations that go into determining an appropriate amount for the MSA account are the following:

• Life expectancy – an individual’s age at the time of the injury will affect the estimated costs for future medical care. CMS started using the Center for Disease Control 2008 United States Life Tables for workers’ compensation life expectancy calculations in January 2013.
• Generic pricing – substituting generic prescription for brand name drugs may result in a lower set-aside amount.
• Use of Structured Settlements – these settlements take the total settlement, annualize it and pay it out over the course of an individual’s life in yearly payments. Medicare, when available, will then cover any additional costs related to the work injury during the year.

It is important to take into account Medicare’s interest when negotiating a workers’ compensation settlement to cover long-term medical needs. Proper allocation of funds can maximize a recovery while also making sure Medicare’s interests are considered.

If you or a family member suffers a serious injury in a workplace accident, contact an experienced Pittsburgh workers compensation attorney who can advise you of your rights.