When it comes to medical insurance coverage two of the largest providers of medical insurance in the United States are governmental programs. Medicare is the government insurance program that was created to insure the elderly and disabled. In order for an individual to qualify for Medicare, that person must meet the following requirements for the program:
- Be 65 years of age or older and be eligible for Social Security; or
- Have a qualifying disability and have received Social Security for at least two years; or
- Be 65 years of age or older and pay for Medicare coverage; or
- Be of any age with end-stage renal disease or amyotrophic lateral sclerosis (“ALS” or “Lou Gehrig’s disease”).
- Importantly, end-stage renal disease is permanent kidney failure requiring dialysis or a kidney transplant.
It is important to note that there is no income or financial resource criteria stated for eligibility for Medicare coverage. The Medicare program is administered by the Centers for Medicare and Medicaid Services (“CMS”). The Medicare program itself has four parts:
- Part A: Part A is hospital insurance, which covers hospital care, skilled nursing under certain circumstances and hospice care;
- Part B: Part B is medical insurance coverage for outpatient services;
- Part C: Part C comprises Medicare Advantage Plans, which are private insurance options for covering hospital and medical costs; and
- Part D: Part D is for drug coverage and helps to cover prescription medications.
A Medicare set-aside account (“MSA”) is a settlement account that results from a workers’ compensation or personal injury claim. Specifically , the account is set up to have any funds recovered from a personal injury or workers’ compensation claim set aside in a special account in order to pay for the injured person’s future medical treatment and service costs. Once the funds that were set aside in the account are exhausted, Medicare will then begin paying for the injured person’s qualified medical expenses.
Importantly, the Medicare Secondary Payer Act is a federal Act that recognizes that personal injury lawsuit settlements shift the burden of medical expenses from a private insurance company to the Federal Government. As such, the Act allows Medicare to recover from auto insurance companies or other liability insurance companies that fail to cover medical costs when their insureds or the person who their insured harmed are also Medicare beneficiaries.
If an MSA is required in a case, then the person for whom the account is required must place part of their workers’ compensation or liability settlement in a separate bank account. This money must then be used only to pay medical expenses related to their compensable injury.
When Is a Medicare Set-Aside Account Necessary?
As mentioned above, if a person is on Medicare, then they must take Medicare’s interests into account when settling their workers’ compensation or personal injury claims. In most cases, the person’s personal injury attorney will be the person that assists their client in setting aside the funds necessary to pay Medicare voluntarily.
Further, certain cases also require a formal approval from the Centers for Medicare & Medicaid Services (“CMS”) prior to accepting payment from an insurance company or other party responsible for a Medicare member’s injury. In general, a person must get CMS’ approval in a workers’ comp or personal injury claim if:
- They are eligible for Medicare and their settlement exceeds $25,000; or
- Their Medicare eligibility is reasonably expected within 30 months and their claim or lawsuit settlement exceeds $250,000.
If an individual does not meet the above thresholds, then they must take Medicare’s interests into account when receiving funds for an injury, but they do not have to first seek CMS’ formal approval of their settlement.
Once again, in general a person is free to settle their workers’ compensation claims or personal injury claims without first consulting Medicare. However, it is always best to allow an experienced personal injury lawyer to handle collecting the damages award first and then distributing the damages award as necessary to cover any claims on the awards that other parties involved may have. This will ensure that a plaintiff is not later on the hook for not properly handling their claim.
How Do I Get a Medicare Set-Aside Account Approved?
Once again, CMS approval is not always required. However, if CMS approval is required, the person for whom the account is being required must submit an MSA proposal containing information and details about their medical conditions, treatment history, and related expenses.
Typically the information is submitted electronically through the Workers’ Compensation MSA Portal online. The information may also be submitted via mail. CMS will then review the information, and decide how much money that the person must place in their MSA.
What Happens If I Don’t Set Up a Medicare Set-Aside Account?
If an individual has been requested to create a MSA and fails to do so, then they may be financially responsible for medical treatment related to their compensable injury. In such cases, Medicare will assume that 100% of your settlement was for future medical expenses and may try to require you to spend the entire amount of your settlement on related medical treatment before Medicare will cover any part of the injury.
How Do I Manage a Medicare Set-Aside Account?
As far as managing a MSA, an individual may either hire a company to manage their Medicare set-aside account or self-administer the account. If a person chooses to self-administer their MSA, then they must provide an annual accounting to CMS. Each year, they will be required to submit an “annual attestation” showing how they spent their MSA funds.
Once an individual has spent the entirety of their MSA, then they or the account manager must file a Final Accounting with CMS. After the Final Accounting is processed and approved, Medicare should then cover injuries relating to that person’s workers’ compensation or personal injury claim.
What Is a Conditional Payment?
If Medicare paid for medical treatment related to a workers’ compensation or personal injury claim during the pendency of the lawsuit or claim, then the individual that received the funds must also reimburse these “conditional payments.” Conditional payments are different from MSA’s.
Conditional payments are payments that address past treatment, while MSA’s deal with future medical treatments. As such, before settling a claim or lawsuit where Medicare has made payments during the claim or lawsuit, an individual must contact CMS’ Benefits Coordination & Recovery Center and request a Conditional Payment Letter.
Once CMS receives the request, CMS will then review the file and determine whether it paid for treatment related to your workers’ compensation or personal injury case. CMS will then issue a Conditional Payment Letter that describes the covered treatment and the amount that must be reimbursed.
Can a Lawyer Help Me Create a Medicare Set-Aside Account?
In short, yes. As can be seen, Medicare Set-Aside Accounts are often very complicated matters. Because of this, there are lawyers and other businesses that specialize in Medicare Set-Aside proposals. As such, if you are being asked to set up a MSA as a result of a workers’ compensation claim, then it is in your best interests to consult an experienced workers compensation lawyer.
An experienced personal injury lawyer will be able to help guide you through the process and ensure that you properly set up and manage the account. Further, they will be able to assist you in recovering the best possible damages award to compensate you for your injuries.