medicare set aside - Jeffrey P. Gale, P.A.

Jeffrey P. Gale, P.A. /// Personal Injury Liability Cases — The Perils of Ignoring Medicare’s Future Interest

Jeffrey P. Gale, P.A. — Tue, 29 Apr 2025 18:24:55 GMT

Our law firm handles both workers’ compensation and personal injury cases, claimant’s/plaintiff’s side only. For years we have been dealing with Medicare Set-Asides (MSA) in our workers’ compensation cases. We have not been doing it in our personal injury cases. It may be time to start.

A Medicare Set-Aside is a legal device used to make sure Medicare covers future medical expenses associated with accident-related injuries.

When Medicare began in 1966, it was the primary payor for all claims except for those covered by Workers’ Compensation, Federal Black Lung benefits, and Veteran’s Administration (VA) benefits. In 1980, Congress passed legislation to expand the exception list to include the following plans:

Liability insurance plans (automobile, premises)
No Fault (PIP)
Self-Insured

All of these plans, rather than Medicare, are considered primary payors of medical expenses covered by the respective policies. In 2007, Congress passed legislation imposing reporting requirements on primary payors. The requirements, which involve furnishing Medicare with claim-related information, are laid out in section 111 of the Medicare, Medicaid, and Schip Extension Act of 2007. The purpose of the requirements is to keep Medicare from paying for medical care that is otherwise the responsibility of primary payors. Congress has decided that Medicare, which is a taxpayer-funded program, should not bear primary responsibility for medical expenses covered by insurance policies and self-insureds.

The Centers for Medicare & Medicaid Services (CMS) has issued rules for when an MSA must be used in workers’ compensation cases. The guideline is that injured workers must be eligible for Medicare or expect to be eligible within 30 months of the settlement of the workers’ compensation case.

Individuals become eligible for Medicare based on age or disability. The age for entitlement is 65, while individuals under 65 become eligible after they have been qualified to receive Social Security Disability Income (SSDI) benefits for 24 months. Many people injured in accidents apply for SSDI, implicating MSA issues.

CMS has not issued guidelines for personal injury cases. However, as the reporting language and other requirements do not distinguish between workers’ compensation and personal injury cases, it is reasonable to conclude that the MSA law applies equally to both.

An MSA designates portions of the proceeds of a settlement to pay for future accident-related medical expenses. Typically, the set-aside amount is determined by experts employed by the parties — in workers’ compensation cases, the expense is always covered by the carriers — based on medical conditions and anticipated needs. In many instances, CMS will review the proposed set-aside amount to determine adequacy. It has the option of approving the proposed amount or requiring more. On rare occasions, it will even require a lower amount. To avoid future issues, it is always better to get CMS’s approval. However, CMS will only review WCMSA proposals that meet the following criteria:

The claimant is a Medicare beneficiary and the total settlement amount is greater than $25,000.00; or
The claimant has a reasonable expectation of Medicare enrollment within 30 months of the settlement date and the anticipated total settlement amount for future medical expenses and disability/lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.00

Medicare Set-Asides are not mandatory. No law is violated for not using one. However, if one isn’t used where the injured person is eligible for Medicare or expects to be eligible within 30 months of the settlement, Medicare will require that 100% of the settlement money be used to pay for accident-related medical services before it will begin to cover any accident-related medical expenses. (Even without an MSA, Medicare will continue to cover the medical expenses of care unrelated to the accident.)

With an MSA, especially one that has been pre-approved by CMS, Medicare will become the primary payor once the MSA money is exhausted. However, CMS places the burden on the Medicare recipient to prove the money was exhausted appropriately. Because the paperwork is onerous and exacting, it may be advisable to use a company to administer the MSA. A number of companies offer the service at a reasonable rate — $1,000 for one we did recently.

An MSA can also be self-administered. Because of the difficulty in administering the MSA and the consequences of failing to do so correctly, we have our clients who choose this route sign a document acknowledging the risks and their duties and responsibilities.

The need for an MSA can make it more difficult to settle a case. Except to pay for medical care, a portion of the settlement proceeds is beyond the reach of the injured party. Some of our clients decide to use the MSA-earmarked money on unrelated expenses. Where, after thoughtful consideration, it is decided that the medical needs for the accident-related injuries will be nominal, this can be a safe option.

There is no reason to believe that MSAs are not a necessary tool in personal injury cases. It may be time to start treating them like they are.

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Contact us at 305-758-4900 or by email to learn your legal rights.

Jeffrey P. Gale, P.A. is a South Florida based law firm committed to the judicial system and to representing and obtaining justice for individuals – the poor, the injured, the forgotten, the voiceless, the defenseless and the damned, and to protecting the rights of such people from corporate and government oppression. We do not represent government, corporations or large business interests.

While prompt resolution of your legal matter is our goal, our approach is fundamentally different. Our clients are “people” and not “cases” or “files.” We take the time to build a relationship with our clients, realizing that only through meaningful interaction can we best serve their needs. In this manner, we have been able to best help those requiring legal representation.

DISCLAIMER: This information provided by Jeffrey P. Gale, P.A. is for informational purposes only and is intended to be used as a non-legal guide prior to consultation with an attorney familiar with your specific legal situation. It should not be considered legal advice or counseling. No such legal advice or counseling is either expressly or impliedly intended. This information is not a substitute for the advice or counsel of an attorney. If you require legal advice, you should seek the services of an attorney.

Jeffrey P. Gale, P.A. // Medicare Set-Aside (MSA) Issues in Florida Workers’ Compensation Cases

Jeffrey P. Gale, P.A. — Fri, 20 Sep 2024 20:46:44 GMT

Medicare is a taxpayer-funded federal health insurance program that pays some health insurance costs. People are eligible for Medicare when they turn 65 years old. In addition, Medicare is automatically available 24 months after becoming entitled to Social Security Disability Income (SSDI). (Date of entitlement is the date of disability plus a five month waiting period. For example, if the date of disability is June 1, 2024, the date of entitlement is November 1, 2024, meaning that the earliest the applicant will qualify for Medicare is November 1, 2026 — there are exceptions to this rule if the disabling diagnosis is End Stage Renal Disease or ALS.)

Medicare will not pay the medical expenses associated with a job accident while the workers’ compensation carrier is paying for the care. This is simple and straightforward. Matters become more complicated when a settlement of the workers’ compensation case is contemplated.

While the workers’ compensation carrier will not pay for medical care after a settlement, Medicare places conditions on paying for post-settlement accident-related medical services. Before it begins paying, Medicare requires that a portion of the settlement proceeds be depleted on accident-related medical expenses.

This requirement does not apply in every instance. It is only triggered under these circumstances:

The total workers’ compensation settlement amount is over $25,000 and the claimant is a Medicare beneficiary.
The claimant is not a Medicare beneficiary, but expects to enroll within 30 months of the settlement date, and the total settlement amount is over $250,000.

When the requirement is triggered, Medicare should be presented with a proposed amount to be paid from the workers’ compensation settlement before the settlement becomes binding. While the settlement does not have to be made contingent on Medicare’s approval, the workers’ compensation insurance carrier will insist on it. In most cases, it’s also a good idea for the claimant. The proposal is called a Medicare Set-Aside (MSA).

The workers’ compensation carrier hires a company to prepare and submit the Set-Aside to the Centers for Medicare and Medicaid Services (CMS). The amount of the proposal is based on a calculation of anticipated future medical expenses. It generally takes Medicare 30 to 60 days to review the proposal and respond.

Not infrequently, CMS rejects the proposal. When it does, it will propose an acceptable amount. For this reason, the workers’ compensation settlement agreement should include language allowing both parties the option of meeting CMS’s proposal. This language keeps the settlement agreement from being automatically void upon CMS’s rejection. In many instances, the workers’ compensation insurance carrier will agree to pay the difference, and it sometimes makes sense for the injured worker to pay the difference or chip in with the carrier.

The MSA money can only be used on accident-related medical expenses, and CMS has strict reporting requirements. Because a violation of either will relieve Medicare of further responsibility, a professional should be hired to administer the MSA at a reasonable cost. It’s worth it.

The MSA lump sum can be annuitized. This frees up more of the settlement money than if the entire lump sum is put into a Set-Aside account initially. We recently settled a case with an $87,000 Set-Aside projection. The annuity on this required a $56,000 investment, thus freeing up some $30,000 the claimant can use on things other than medical expenses.

The claimant does not have to put the money into a recommended MSA. The consequence is that Medicare will not pay for any accident-related medical expenses. When our clients choose this route, we have them acknowledge in writing their understanding of the consequences.

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Contact us at 305-758-4900 or by email to learn your legal rights.