Frequently used in workers’ compensation claims and personal injury lawsuits, a Medicare set-aside (MSA) can be used to pay part of your future required medical bills. However, the laws surrounding its use can be complicated. You may not be sure if you qualify for an MSA, how to put one in place, or how to use the funds in one.
Work with a skilled Durham workers’ compensation lawyer and get the guidance you need in your specific situation.
What is a Medicare set-aside?
Generally, a Medicare set-aside (MSA) is used to funnel a portion of an insurance settlement or lawsuit award into a fund to reimburse the government for Medicare payments you receive or expect to need. Medicare is intended as a secondary payer for your expenses, and whoever is paying your settlement is the primary payer.
You may already receive Medicare payments through Social Security Disability Insurance (SSDI) benefits. These can cover your bills while you wait for compensation. If you are involved in a personal injury lawsuit, the settlement can take months to negotiate while you receive Medicare benefits. In this case, the MSA is designed to pay the government back for the payments you received while waiting for your compensation from the lawsuit.
In situations where you are seeking benefits from a workers’ compensation claim, you and your attorney can include a Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA). This arrangement is a financial agreement to pay your future medical treatment resulting from the injury, illness, or disease covered by your workers’ comp claim. With a WCMSA, you must use the funds set aside before Medicare will provide any benefits.
Why you may want to use an MSA
Taking a personal injury case to court is time-consuming and expensive. Many defendants will negotiate an out-of-court settlement rather than go to trial and risk a larger loss. This can work to your advantage as a plaintiff, but the catch is that you must be sure your settlement will cover all your potential costs. Otherwise, you could be left with a financial crisis.
Once you accept a settlement, there is no going back for more. This is when you need to ensure all your past, present, and future damages are included. In the case of a Medicare set-aside, a special company will evaluate your current injuries and expected care, then they will issue a recommendation for how much to put aside for future treatment. Medicare will approve the amount and place the funds in your MSA as a lump sum or a structured settlement annuity.
The goal of an MSA is to pay for your treatment and care before relying on Medicare insurance and to prevent you from running out of settlement funds to pay your ongoing expenses. When you do not know the exact cost of your future treatment needs, you can depend on the MSA to supply money for those expenses before turning to the government.
Medicare set-aside requirements
To be eligible for an MSA, you must meet certain requirements:
- As an injured worker, you must qualify for Medicare health insurance. Generally, you must be 65 or older, but if you are disabled, you can receive payments.
- You must settle compensation for your future medical care with a lump sum payment.
In both personal injury lawsuits and workers’ compensation claims, money to cover all future medical costs related to your injury can go into your MSA.
In both situations, the funds can only be used to cover expenses related to the injury or illness you sustained in your work-related incident or from someone else’s negligence in your personal injury suit. Your other losses in a personal injury case, such as property damage or pain and suffering, should be paid separately.
How an MSA receives funding and pays out to you
Funds for an MSA must be placed in a separate, interest-bearing bank account. You will need to keep copies of all your bills and receipts to document your requests for payments. You will also be required to report all your expenses paid through the MSA to the Centers for Medicare & Medicaid Services (CMS) every year.
In the event your MSA funds run out, you will also report this to the CMS. Since the funds can only be used to pay for expenses related to your original injury that Medicare would cover, you must be sure you have settled for enough funding to cover your potential needs. If you use the money to pay for anything other than Medicare-covered costs, you risk losing temporary access to the MSA until an administrator can review your case.
Calculating an MSA
Depending on the company administering your workers’ compensation claim, you may be required to set up a WCMSA. While an MSA is not required in a personal injury lawsuit, it is valuable to ensure you can receive Medicare payments as a backup in case your settlement does not meet your future needs.
Ideally, you will calculate a fair and appropriate settlement amount to avoid this. Your lawyer can help you create the estimate by determining your life expectancy and how much you will need to cover your medical expenses related to your injury or illness. Once you have an amount that all parties agree to, you can initiate the MSA.
Get help from trusted legal advocates to set up your MSA
Whether you need a personal injury attorney or a Durham workers’ compensation lawyer, the team at Johnson & Groninger PLLC can assist you in understanding all your options for compensation in these types of claims. We manage the stressful and confusing details around litigation, insurance, and workers’ compensation for you, so you can focus on getting better.
We understand and handle every type of personal injury and workers’ comp case. Our record of verdicts and injury settlements speaks for itself. Our firm is built on a passion for justice, backed up by hard work and tenacious representation. Schedule a free consultation to speak with an attorney and learn more today. Call us at (919) 240-4054 or use our convenient online form.