Atlas Settlement Group : About Medicare Set-Asides

About Medicare Set-Asides

In today’s environment, proper evaluation of medical expenses is a significant factor in the effective resolution of claims. Both past and future medical expenses must be considered, particularly when Medicare is involved. Currently, Medicare takes the position of a secondary payer in cases where there is another culpable party, such as an employer and/or its Workers’ Compensation Insurance carrier as set forth in the Medicare Secondary Payer Act 42 U.S.C. §1395y and 42 C.F.R §411:1, et al. MSP is asserted on matters governed under Workers’ Compensation law, the Federal Employees’ Compensation Act, the US Longshoremen’s and Harbor Workers’ Compensation Act and the Federal Coal Mine Health and Safety Act of 1969. The purpose of the Medicare Set-Aside Arrangement (MSA) is to provide funds to the injured worker to pay for future medical expenses that would otherwise be covered by Medicare, otherwise known as “qualified medical expenses”. If the injured worker incurs qualified medical expenses that exhaust the anticipated annual amount, then Medicare will pay for any excess expenses. By establishing a Medicare Set-Aside Account, parties to a settlement are protecting Medicare’s interest and complying with the Medicare Secondary Payer Act.

The Centers for Medicare and Medicaid Services (CMS) must determine whether the settling parties are adequately protecting its interest. This is possible when the parties to settlement submit a Proposed Medicare Set-Aside Arrangement, which outlines the future anticipated qualified medical expenses, to CMS for review and approval.

While Medicare requires that all workers’ compensation settlements consider Medicare’s interest as a secondary payer, CMS only reviews Medicare Set-Aside that meet certain requirements:

1. If a Claimant is Medicare-eligible(1) at the time of settlement, and the total settlement value is $25,000 or greater.

(1)Medicare eligible is defined as individuals who are sixty-five (65) years of age or older, those who are in receipt of Social Security Disability benefits for a period of twenty-four (24) months or longer, or those suffering from End Stage Renal Disease.

-or-

2. If there is a “reasonable expectation”(2) that the Claimant will be Medicare-eligible within thirty (30) months of settlement, and the total settlement value exceeds $250,000.

(2)Claimants are considered to meet the “reasonable expectation” of future Medicare-eligibility if they are between sixty-two-and-a-half (62.5) years of age and sixty-five (65) years of age, they have applied for Social Security Disability benefits, they have applied for and have been denied Social Security Disability benefits, or they have Renal Disease not yet in the end stage.

Medicare’s demands can cause confusion and uncertainty in settling claims. It is important that you entrust a professional company with the job of handling your Medicare needs. Atlas Settlement Group provides a complete range of services to ensure that both Medicare and the Employer/Insurer’s best interests are considered. Services available include:

• Medicare and Social Security Disability Eligibility Verification
• Substandard Life Expectancy Evaluation (Rated Ages)
• Medicare Set-Aside Allocation Report Preparation
• Medicare Set-Aside Submission to CMS for Approval
• Future Medical Cost Projection Evaluations (MCP)
• Assistance in Set Up of Professionally Administrated MSA / MCP Custodial Account
• Establishment of Structured Settlement Annuities to Fund the Annual MSA / MCP Obligation
• Preparation of Appropriate Settlement Language

At Atlas Settlement Group, we are committed to providing the necessary evaluations and reports to assist in the effective resolution of all claims. Although the Medicare Set-Aside is traditionally utilized to resolve Workers’ Compensation claims, they are now beginning to be considered in Liability claims as well.

At the present time, Medicare does not require a MSA to be completed for every settlement relating to Liability claims or claims under Federal Employer’s Liability Act (FELA). Use of a MSA is required when settling as a third party liability claim, with an underlying WC claim that triggers the MSA thresholds. The same requirement applies to FELA cases with an underlying Longshoreman’s action. In many instances where Medicare eligibility is not in question, settling parties are requesting the guidance from CMS when significant dollar amounts are involved.

On December 29, 2007, President George Bush signed into law the “Medicare Medicaid, and SCHIP Extension Act of 2007 [PDF:132KB]”. The new legislation amends the Medicare Secondary Payer Act (MSPA) by establishing new reporting guidelines. Under the new rules, all liability insurers, no-fault insurers, workers’ compensation insurers and self-insurers will be required to determine whether any individual who files a claim against the insurer or any entity insured or covered by the insurer is entitled to Medicare benefits. If so, the insurer must provide Medicare with that individual’s identity and any other information that may be required by the Secretary of Health and Human Services. This information must be furnished to Medicare within the time specified by the Secretary after the claim is resolved through settlement, judgment, award or other payment (regardless whether or not there has been an admission or determination of liability).

If an insurer fails to notify Medicare in accordance with these guidelines, a civil penalty of $1,000 per day will be charged per claimant. The new legislation clearly indicates a shift in policy which will result in the federal government monitoring general liability claims more closely.

Prior to June 2009, it’s the understanding that the Secretary will issue directives concerning additional information that will be required. Atlas will continue to follow these new guidelines and will advise our clients concerning all new developments in this area.

"Medicare’s demands cause confusion and uncertainty in settling claims. It is important that you entrust a professional company with the job of handling your Medicare needs."

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Workers Compensation Info