Medicare Set-Asides (MSA)

Medicare Secondary Payer provisions require claimants who receive or will receive Medicare to follow specific guidelines to preserve their benefits if they recover settlement proceeds for future injury-related care. Medicare requires that a plaintiff considers Medicare’s interests and allocates a portion of their recovery to future medical expenses. In this case, Medicare becomes the secondary payer to the settlement or recovery. Prindable Settlements has solutions to help plaintiffs minimize their Medicare Set Aside obligations.

  • A Medicare Set-Aside (MSA) is a way to protect Medicare's interests by setting aside a portion of a settlement to cover future medical costs related to the injury. Once the funds in the MSA account are exhausted, the plaintiff can resume receiving Medicare payments.

    The allocation amount for an MSA is determined by reviewing your estimated total cost of future medical care, medical history, pre-existing conditions, current treatments, physician statements, life expectancy, and other relevant factors relating to the lawsuit and settlement amount.

    A calculation of all these factors will result in a dollar amount that must be set aside to pay for future injury-related care prior to Medicare being billed.

  • A proposed Medicare Set-Aside (MSA) must meet certain criteria for review by the Centers for Medicare and Medicaid Services (CMS).

    CMS has only released guidelines for Workers' Compensation Medicare Set-Asides (WCMSAs).

    WCMSAs will only be reviewed by CMS if:

    - The plaintiff is a Medicare beneficiary with a settlement amount greater than $25,000 or

    - The plaintiff is not a Medicare beneficiary but is expected to enroll in Medicare within 30 months of the settlement date with a settlement amount greater than $25,000.

    Although no official guidelines have been released for Liability Medicare Set-Aside (LMSA), CMS has indicated that Medicare Administrative and Recovery Contractors may deny payment for items and services that should be paid from an LMSA. If the settlement or another payer should have paid, Medicare may seek reimbursement for expenses.

    It's crucial for plaintiffs and their attorneys to work with a settlement planning expert to ensure compliance with Medicare Secondary Payer provisions to avoid consequences. We can help.

  • For clients facing medical expenses not covered by insurance or Medicare, a Medical Custodial Account (MCA) can be established to collect and distribute settlement funds for these costs. This professionally administered trust account is often used for injured parties who want to ensure they have funds to pay for services not covered by Medicare.

Funding a Medicare Set-Aside

Funding a Medicare Set-Aside (MSA) can be done through two options: a lump sum or a lump sum combined with a Structured Settlement. Read below to find out why a Structured Settlement and cash combination is the smart option.

  • With a lump sum MSA, all funds are placed immediately into the MSA account. All of the funds in the MSA must be spent before Medicare steps in as the primary payer.

  • With this approach, a smaller initial lump sum payment is used to establish the MSA, covering the cost of the first procedure and two years' worth of annual payments. The MSA is then replenished annually through Structured Settlement payments. It costs less in present day dollars to fund annual Structured Settlement payments for the MSA.

  • Consider the scenario where your MSA funds run out nine months into the annual period. In this case, Medicare will cover medical expenses for the remaining three months of the year. The next annual deposit from the Structured Settlement annuity will then refill the MSA to take over paying medical costs.

    Using a structured settlement annuity, claimants typically save an average of 25% on their MSA, maximizing the value of their overall settlement proceeds.

    In short, you keep more money in your pocket and stay Medicare-eligible!