Medicare Set-Asides

If you are a Medicare beneficiary and are about to receive a settlement, read on. Without considering Medicare’s rules and requirement, you could lose your government benefits when you receive a workers’ compensation or liability settlement to pay for future injury-related expenses.

download pdf

How Does This Work?

By law, Medicare is known as a “secondary payer”. That means that when an injured person has certain types of insurance coverage, those insurance companies are first responsible for paying for related medical expenses. If those companies do not cover the full cost of services, Medicare may then become responsible for the balance of payment.

Medicare beneficiaries risk a denial of coverage for future medical expenses if the Centers for Medicare and Medicaid Services determine that Medicare’s interests have not been appropriately considered. A Medicare set-aside is one way to avoid compromising this much-needed coverage.

Establishing a Medicare Set-Aside (MSA)

In short, a Medicare Set-Aside (“MSA”) is a voluntary arrangement that demonstrates a good-faith effort to fund future care without relying solely on Medicare. An MSA is a fund created for the settlement of a Workers’ Compensation or liability case. It is established from a portion of the settlement amount and is used to pay for future injury- or illness-related medical expenses that would otherwise be payable by Medicare. Funds must be established under an insured account and may be managed by the injured plaintiff or administered through a custodial account. Milestone coordinates the administration and set-up of your MSA through a third party to ensure that you are not over-funding the account.

While establishing an MSA is not mandatory, it adequately protects Medicare’s interests while ensuring a person’s settlement is as beneficial to his or her future as possible.

When this is the best option for a Medicare beneficiary, we take a streamlined and systematic approach to ensure adequate Medicare compliance and protection.

Our recommended four-step process is as follows:

  • Determine if a MSA is legally necessary based on the individual’s anticipated settlement amount, potential cost of future related medical care, and current Medicare status and eligibility.
  • Determine the appropriate allocation. An expert allocator will gather information about the beneficiary’s covered and non-covered medical needs.
  • Prepare for compliance. Plaintiffs MAY choose to self-administer their MSAs. However, self-administration could mean making critical accounting errors and improperly using funds.
  • Implement the most cost-effective funding solution. MSAs can be funded in different ways. An expert can weigh these options for the best tax-saving benefits, flexibility, and cost.

By taking a logical, documented approach to the MSA process, individuals can comply with Medicare secondary payer laws, and their future medical needs and Medicare eligibility will be protected.