Pennsylvania Workers’ Compensation Settlements and Medicare Set Asides

A Workers’ Compensation Medicare Set Aside is a financial arrangement which allocates a certain portion of a Workers’ Compensation Settlement for future medical care. The Medicare Set Aside funds must be used up before Medicare pays for the work-related injury or illness.

What is the purpose of a Medicare Set Aside?

The purpose is to protect Medicare’s interests. Medicare doesn’t want the burden of work-related medical treatment shifted to them. Indeed, Medicare is a secondary payer. The Medicare Set Aside protects Medicare by ensuring that the workers’ compensation insurer is funding payments for future work-related treatment.

The Medicare Set Aside process is done on a case by case basis. While no statute requires a Medicare Set Aside, it is highly recommended in certain situations.

The Center for Medicare and Medicaid Services will only review a Workers’ Compensation Medicare Set Aside proposal if:

A.   Claimant is a Medicare beneficiary and the total settlement is over $250,000.00

OR

B.   If Claimant has a reasonable expectation of Medicare enrollment within 30 months of the settlement date AND the anticipated total settlement for future medical and disability/lost wages over the life or duration of the settlement is expected to be greater than $250,000.00.

Attorneys and injured workers who are involved in Pennsylvania Workers’ Compensation cases should be cautioned that every settlement has to consider Medicare’s interests. Does that mean every case needs a Medicare Set Aside? No, per the above, CMS will only review when certain factors apply. But, to protect yourself, it is recommended that a certain portion of the settlement proceeds be designated as future medical, even if an MSA is not required, in certain cases where 1) claimant is on Medicare already, 2) claimant will soon be on Medicare, 3) the Pennsylvania Work Comp Settlement is large, 4) you reasonably expect some future work-related medical treatment to take place, or 5) a combination of the above applies. In other words, insert language into the Pennsylvania Compromise and Release Agreement that Claimant will set aside X amount of dollars to pay for future work-related treatment.

Do these rules apply to a Pennsylvania Workers’ Compensation Settlement?

Yes!

What about an annuity?

How does Medicare determine if the value of the annuity meets the $250,000.00 threshold? Medicare determines the value of an annuity based on how much the annuity is expected to pay over the life of the settlement, not on the Present Day Value or cost of funding the annuity.

If I intend on using other insurance and promise not to have Medicare billed, can I reduce the amount of the Medicare Set Aside?

No. The regional officers who review the MSAs cannot approve settlements that promise not to bill Medicare.

Can I state in the settlement agreement that the proceeds are only for past medical treatment in order to circumvent CMS review?

You won’t need a set aside if you can prove A) the facts of the case demonstrate that you are being compensated for past medical expenses, B) there is no evidence that you are trying to maximize other parts of the settlement to the detriment of Medicare AND C) your treating doctor writes a report concluding that to a reasonable degree of medical certainty you will no longer require any Medicare-covered treatments for the work injury.

The issue of determining whether a formal Medicare Set Aside proposal in a Pennsylvania Workers’ Compensation case is an important one and should not be taken lightly. Reviewing the cms.gov website and memoranda on a regular basis is recommended.

For a free analysis of your Pennsylvania Workers’ Compensation case, call or email Certified Specialist In Philadelphia Workers Comp, Michael W. Cardamone at (267) 651-7945 or Michael@cardamonelaw.com Free consultations 7 days a week.

Note that nothing on this blog should be construed as legal advice. No attorney-client relationship is formed unless you sign a Fee Agreement with my office. Every case is different and requires an individual analysis. Michael is licensed to practice law in Pennsylvania. Michael is a senior trial attorney, and managing attorney for Krasno Krasno & Onwudinjo’s Blue Bell, PA office. Michael handles PA Work Comp cases across Pennsylvania. MyPhilly WorkersComp is Michael’s personal brand and is trademarked.