Under federal law, the U. S. Department of Health & Human Services operates the Centers for Medicare and Medicaid Services (CMS). The law requires all workers' compensation insurers (including self-insurers, risk retention groups, alien insurers and non-admitted insurers writing excess coverage) to protect the interest of Medicare when a work comp claim settlement meets the criteria set forth in the Medicare Set-aside Arrangements (MSA) statutes.
A MSA is a settlement plan where a portion of the settlement proceeds are set-aside in a trust to pay the claimant's future medical expense. MSA keeps Medicare from paying for medical care that should be paid by the work comp insurer. [Please note: if the work comp claim settlement leaves future medical care open and only closes the indemnity portion of the claim, the MSA statutes do not apply].
The requirements for requesting a MSA approval when the future medical portion of the work comp claim is being settled include:
What is “reasonable expectation” of Medicare enrollment within 30 months? Glad you ask. It is:
When a MSA is submitted to CMS it needs to contain:
Do not ignore Medicare's interest when settling a work comp claim. The CMS by law has a priority right of recovery for any payments they make that should have been covered by work comp. The CMS can pursue recovery against any entity receiving a payment from them.
A MSA is not required for work comp settlements of $25,000 or less. However, for current beneficiaries of Medicare, CMS still has the right of full recovery for ANY medical payments by Medicare that should have been paid by work comp.
While CMS has not had the man-power to cross check all work comp claims against Medicare's enrollment, the day this is done electronically is not far away. A question the work comp adjusters need to start asking during the initial interview with the claimant is “Are you enrolled in Medicare or anticipate enrolling in Medicare in the next 30 months?”
On the other hand, take the claimant who settles the work comp claim for $245,000. The claimant at the time of settlement does not have a “reasonable expectation” of enrolling in Medicare within the next 30 months. Five years after the work comp settlement, the claimant has spent the settlement funds on other things and has not saved anything to cover on-going medical needs due to the work comp injury. As the claimant did not have a “reasonable expectation” of enrolling in Medicare at the time of the settlement, the claimant can enroll in Medicare and Medicare will pay for the work comp related services without having a right to recovery. (workersxzcompxzkit)
When you create a MSA, the claimant often wants to self-administer the trust created. If your state law will allow the claimant to administer his own trust, it is okay with the CMS. What the claimant often does not realize is the self-administered trust is subject to the same rules and regulations as any other set-aside arrangement
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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers' comp issues.