On November 11, 2010 I was part of a seminar panel addressing this issue. The recommended method to protect Medicare’s interest when settling a workers’ compensation claim for a Medicare beneficiary is through a Medicare set-aside arrangement (WCMSA). This allocates a portion of the Workers’ Compensation settlement for future medical expenses. The amount of the set-aside is determined on a case by case basis, after review by the Centers for Medicare and Medicaid Services (CMS). Once CMS determines the set aside amounts, the money is put into an account for use only towards medical bills related to the work injury. Once this set-aside money is used up and accounted for to CMS, Medicare will again begin to pay for treatment related to the work injury.
There are two scenarios when a WCMSA is needed in settling a workers’ compensation case. The first scenario is when a person is already on Medicare, and they are settling a case for a lump sum of money that exceeds $25,000.00. The WCMSA only applies to workers’ compensation settlements that are settled under section 20 of the workers’ compensation statute. The WCMSA is not needed when the case settles for a regular percentage of permanent disability.
The second scenario is when the person has a “reasonable expectation of becoming a Medicare beneficiary within 30 months of the settlement date and the lump sum settlement totals more than $250,000. Reasonable expectation of becoming a Medicare beneficiary is someone who has applied for SSD, been turned down, and has appealed; or someone who is 62 years and 6 months old and expects to receive Medicare at age 65.
These requirements on the part of CMS cause delay for the injured worker when settling a workers’ compensation case. However under CMS regulations, the injured worker is required to protect Medicare’s interest when settling a workers’ compensation case. If Medicare’s interest is not considered, Medicare may refuse to pay for medical expenses related to the injury after the case settles. These dollar thresholds are subject to change according to CMS regulations, and careful planning and consideration must be exercised when settling a lump sum workers’ compensation claim when there is Medicare involvement.