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Medicare Set Asides

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Medicare Set-Asides

A Medicare Set-Aside Allocation or MSA is a way to anticipate future medical costs in both workers compensation claims and personal injury claims. It’s important for clients to use a specialized consultant when navigating Medicare Set-Asides to ensure compliance with the Medicare Secondary Payer Act (MSP) established by Congress in the 1980s.

Claimants or Plaintiffs who either are receiving Medicare or are expected to receive Medicare and are settling a workers compensation or personal injury claim will likely be expected to create a Medicare Set-Aside Account. In general, a Medicare Set Aside is intended to pay for injury-related medical expenses that Medicare would otherwise cover; this is meant to prevent a shifting of the medical costs to Medicare when there was compensation paid for such costs paid to the injured party.

A Medicare Set-Aside trust is required to comply with existing and frequently changing laws. In the case of Medicare, the defendant, liability carrier or employer’s carrier (in the case of worker’s compensation) is considered the primary payer for medical expenses while Medicare is the secondary payer. While the primary payer will be responsible for payment up to a certain amount, the MSA determined allocation, once that amount is expended Medicare should cover the bulk of services still needed a related injury. We are only speaking to the medical that Medicare actually covers. For example, Medicare does not cover long-term attendant care or nursing home stays over 100 days.

Medicare will continue to pay for a portion of the client’s medical expenses if the client establishes a trust for using a portion of the settlement for his or her own medical expenses. An MSA is a trust or a trust-like arrangement which keeps separate settlement funds solely for future medical treatment and expenses. This amount is determined by a specialized company who drafts an MSA Report by projecting future medical costs, and this number may or may not need to be approved by the Center for Medicare and Medicaid Services (CMS). Currently, some Medicare cases are not being reviewed by the CMS, but they still need to stay in compliance with the law and CMS Memorandums.

The funds can be added to a Medicare Set-Aside Account either through a single, lump-sum payment or through a structured settlement annuity over time. The use of a structured settlement can significantly lower the present value needed for the Set-Aside and allow the claimant to have more of their settlement dollars free to use for other things. The funds in the MSA are only to be used for medical treatment directly related to this injury, while private insurance or Medicare will continue to cover costs unrelated to the injury sustained related to the liability or workers compensation case.