The rules governing your Medicare coverage are complex. This is especially true when there is other health insurance involved. Perhaps you have insurance through an employer, in which case the Centers for Medicare & Medicaid Services (CMS) are clear that Medicare is always the secondary payer. That means that all medical bills must be submitted to that other insurance first, as the primary coverage. If there is a remaining balance, Medicare can then be billed.
What happens, though, if you are involved in a job-related injury or illness?
Most Medicare beneficiaries are no longer working, but many do undertake at least some form of part-time or full-time employment. Workers’ Compensation claims fall under the same CMS guidelines, meaning Medicare will pay secondarily, but things are more complicated when Workers’ Compensation Insurance is the primary payer. At this point, you will need to become better acquainted with the Medicare Set Aside or MSA.
A Medicare Set Aside Allocation is a financial arrangement involving yourself, your Workers’ Compensation settlement, and Medicare. Under the Workers Compensation Medicare Set Aside arrangements, Medicare will determine a portion of your injury settlement that must be used, or set aside, to cover your medical bills. These are bills relating specifically to your job-related injury, including doctor visits, medications, surgeries, and tests.
Medicare will pay nothing related to your injury until the Set Aside Allocation is depleted. Medicare can and will continue to pay any other medical bills as obligated, outside the injuries and illnesses associated with your Medicare Set Aside arrangements.
Medicare Set Aside arrangements are not required by law. However, given the highly regulated framework around Medicare and Workers’ Compensation, a Set Aside arrangement is something you want to consider for your own financial protection. For CMS to review your Medicare Set Aside proposal, your expected Workers’ Compensation settlement must be more than $25,000.
It advised at that you retain the services of an attorney who specializes in Medicare-related issues and, together with your state Workers’ Compensation agency, prepare your proposal for CMS to review. It is likely you will already be working with an attorney regarding your Workers’ Compensation case, and an experienced lawyer will be well versed in Medicare rules.
After your Medicare Set Aside plan is approved by CMS, your attorney will release the funds to you or your administrator.
You can self-administer your own MSA account, but this is not recommended. It is a complex process and CMS will require sufficient documentation on all Medicare Set Aside spending. Most beneficiaries hire a professional administrator who will ensure proper usage and documentation of the allocation funds.
The portion of your Workers’ Compensation settlement assigned to your Medicare Set Aside allocation must be placed in a trust, or interest-earning bank account. If you are self-administering your allocation, you will need to open this account when your lawyer releases your settlement funds. If you are using a professional administrator, they will open and manage the bank account for you.
You are free to spend all of your set aside funds on any costs, medical or pharmacy, related to the specific injury or illness from your Workers’ Compensation settlement. You are barred from using the funds for any other work-related injuries, or any other services that Medicare does not cover, like dental care. This is why you are encouraged to retain the services of a professional administrator. They will help you navigate the complex rules governing your Medicare Set Aside allocation and ensure all spending is approved by CMS.
When your Workers Compensation Medicare Set Aside arrangements have been met and your funding allocation has been depleted, CMS will make a final review of your spending. If CMS approves all spending as necessary for your job-related illness or injury, the MSA account will be closed. At that point, Medicare once again becomes your primary insurance, covering any medical bills as normally approved under CMS guidelines.
Only Medicare beneficiaries can submit a Set Aside proposal to CMS. While this is an obvious requirement, it may confuse you if you don’t currently have Medicare coverage but will enroll soon. Under CMS guidelines, in this scenario, it must be “reasonable” that you will enroll in Medicare within 30 months of the finalization of your Workers’ Compensation settlement.
Your settlement, including medical bills and lost wages, must be greater than $250,000. That high threshold for Set Aside eligibility may exclude many people and is something to consider as you approach your Medicare enrollment timeframe.
