In some workers’ compensation cases, a Medicare Set Aside (MSA) account may be required to allocate funds to future medical expenses related to your injury. Though there are some advantages to MSAs, there are also plenty of cons. If you’re wondering how to avoid a Medicare set-aside in an Ohio workers’ compensation settlement, you’re not alone.
Below, we’ll guide you through strategies to potentially avoid the need for an MSA and ensure that your workers’ compensation settlement is structured to meet your financial and medical needs.
To learn more, call (513) 533-2009 or reach out online to discuss your workers’ compensation case with Mark L. Newman, a dedicated workers’ compensation attorney in Cincinnati.
What is a Medicare Set Aside?
A Medicare Set Aside (MSA) is a part of some workers’ compensation settlements that helps cover your future medical expenses related to your work injury. The main goal of an MSA is to protect Medicare’s interests by making sure the settlement money is used for medical costs before Medicare steps in to help. In other words, the workers’ compensation claim is the primary payer, and Medicare is the secondary payer.
Here’s how it works: when you settle a workers’ compensation case, part of the settlement amount might be set aside in an MSA account to pay for your future injury-related medical bills. The MSA funds are meant to cover the same kinds of medical expenses that Medicare would usually pay for, like doctor visits and treatment related to your workers’ compensation injury.
It’s important to remember that when you establish an MSA, Medicare will only pay for your injury-related medical care once your MSA funds run out.
Is Medicare Set Aside Mandatory?
Whether a Medicare Set Aside is required depends on the specifics of your workers’ compensation case and is decided on a case-by-case basis. The Centers for Medicare and Medicaid Services (CMS) may require an MSA if certain conditions are met.
When is a Medicare Set Aside Required?
In Ohio workers’ compensation cases, a Medicare Set Aside is typically required when the injured worker is either already a Medicare beneficiary or has a reasonable expectation of Medicare enrollment within 30 months of the settlement date. This is especially true if the anticipated total settlement amount, which includes future medical expenses and lost wages, exceeds $250,000. The MSA ensures that part of the total settlement agreement is set aside to cover future medical expenses related to the workers’ compensation injury.
Medicare Set Aside Requirements
Here are the key requirements for a Workers Compensation Medicare Set Aside Arrangement (WCMSA):
- Medicare Coverage: You must either be a current Medicare beneficiary or have a reasonable expectation of Medicare eligibility within 30 months of the settlement.
- Total Settlement Amount: If your workers’ compensation settlement amount exceeds certain review thresholds set by the Centers for Medicare and Medicaid Services (CMS), an MSA is likely required.
- CMS Approval: Depending on the size of your workers’ compensation settlement, CMS may need to review and approve the WCMSA proposal to ensure that it complies with Medicare Secondary Payer (MSP) rules.
- Documentation: Medical records and a recommendation from your treating physician are often required to determine the appropriate MSA amount for your future medical care.
Why Avoiding an MSA Might Be Beneficial
For some, avoiding Medicare Set Asides might be beneficial because it grants more control over their workers’ compensation settlement. This is because with a WCMSA, there are restrictions on how the funds can be used—you can only spend them on specific medical expenses related to your injury. This reduces the flexibility you have in managing your settlement. There’s also the possibility that the MSA funds might run out, and if you don’t have sufficient funds elsewhere, this could cause significant financial stress before your Medicare benefits kick in.
Without an MSA, you can have a more straightforward settlement process. This means you have greater control over the entire amount of your settlement without having to protect Medicare’s interests.
Strategies to Avoid a Medicare Set Aside
While MSAs can be required in certain cases, there are some ways to minimize or bypass the need for one. By carefully planning your settlement, you can maintain more control over your funds and avoid some of the restrictions that come with MSAs. Here are some strategies to consider:
- Settlement Structuring: Careful structuring of your workers’ compensation settlement is a recommended method for avoiding an MSA. During settlement negotiations, you can ensure that the settlement payment is allocated to non-Medicare-covered expenses, such as lost wages or pain and suffering. This can be detailed in an allocation report, showing that certain settlement funds are not meant for future medical expenses that Medicare would typically cover. Also, choosing a structured annuity over a lump sum can help spread the payments over time, reducing the immediate need for Medicare involvement.
Injury Categorization: Injury categorization helps you avoid a Medicare Set Aside by clearly defining which injuries and related treatments Medicare would or wouldn’t cover. If you can demonstrate through careful documentation and medical evidence that the future medical needs of the injured individual are not substantial or Medicare-related, Medicare may not require a set-aside. - Timing of Settlement: The timing of your settlement can also influence whether an MSA is necessary. If you can settle your workers’ compensation case before becoming eligible for Medicare, you may be able to bypass the requirement for an MSA. This strategy involves negotiating the settlement early enough to avoid Medicare’s involvement in the process. Settling before you qualify for Medicare gives you more flexibility in how the settlement is structured and reduces the likelihood of Medicare demanding a set aside for future medical expenses.
- Consideration of Alternative Arrangements: Exploring alternative arrangements, such as Medicare Advantage Plans or other private insurance options, can be another way to avoid an MSA. These alternatives can provide the necessary protection for your future medical care without the formal requirements and restrictions of an MSA.
Additional Medicare Set Aside Workers’ Compensation FAQs
Dealing with MSAs can feel overwhelming, especially when trying to understand how they work and how they might affect your workers’ compensation settlement. Below, we’ve answered some of the most common questions our clients have about MSAs.
How Does Medicare Set Aside Work?
A Medicare Set Aside sets aside a portion of your workers’ compensation settlement to cover future medical expenses related to your injury. This includes costs for prescription drugs and other treatment-related expenses. As the injured party, you use the MSA funds first for any injury-related medical costs. Once these funds are used, Medicare can then step in to cover any additional expenses.
How Long Does a Medicare Set Aside Take?
The time it takes to establish a Medicare Set Aside (MSA) can vary depending on several factors. Generally, the process can take anywhere from a few months to over a year. Here are some key factors that influence the timeline:
- Gathering necessary medical records, calculating future medical expenses, and submitting the MSA proposal to the Centers for Medicare and Medicaid Services (CMS) can take several weeks to several months.
- Once the MSA proposal is submitted, CMS typically reviews it within 30 to 90 days, but the review period may be longer if additional information or clarification is needed.
- More complex cases, such as those involving significant future medical expenses or disputed claims, can prolong the process.
- Back-and-forth communications between the parties involved, including CMS, can also extend the time frame.
How Long is an MSA Good For?
An MSA is good for as long as there are funds available in the account. There’s no expiration date, but it’s important to use the funds appropriately over time. Once the MSA funds are gone, Medicare will begin covering eligible medical costs.
How Does a Workers’ Comp Settlement Affect Medicare?
Your workers’ compensation settlement affects Medicare by determining who pays for your future injury-related medical expenses. Medicare won’t cover these expenses until you’ve exhausted the funds in your MSA account.
Do You Have to Pay Medicare Back if You Get a Settlement?
Yes, if Medicare has already paid for medical expenses related to your injury before you receive your settlement, you’re required to reimburse Medicare. This is because Medicare is considered a secondary payer, and your settlement should cover those costs first.
Can I Cash Out My MSA?
No, you cannot cash out your MSA for personal use. The funds are specifically allocated for your future injury-related medical expenses. Any unused funds at the end of the year are carried over to the next year.
Can I Spend My Medicare Set Aside Money?
You can only spend your MSA money on medical expenses that are related to your injury and would normally be covered by Medicare. This includes doctor visits, treatments, and prescription drugs associated with your workers’ compensation case. You cannot use the MSA funds for non-medical expenses or treatments unrelated to your injury.
How Ohio Workers’ Compensation Attorney Mark L. Newman Can Help
If you’re filing a workers’ compensation claim and want to avoid unnecessary Medicare Set Asides, it’s essential to have skilled legal guidance on your side. Fortunately, Cincinnati workers’ compensation attorney Mark L. Newman has the experience and knowledge it takes to help you structure your settlement in a way that protects your future while minimizing complications with Medicare. From understanding your rights to ensuring your settlement is properly allocated, Mark L. Newman can guide you through the entire workers’ comp process in Ohio.
Call (513) 533-2009 or contact us online to discuss your case and secure the best possible outcome for your workers’ compensation claim.