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What is a medicare set aside

what is a medicare set aside


An MSA is an allocation created from the settlement of a worker's compensation or liability case. It is established from a portion of the settlement amount to be used to pay future medical expenses that (a) are related the job or accident related injury and (b) would otherwise be payable by Medicare. Bear in mind that Medicare DOES NOT cover everything. For example an injured party that requires custodial care is not likely to receive much from Medicare. The operative phrase in the Medicare Secondary Payer context is "that would otherwise be payable by Medicare".

A common way to show that settling parties are taking into account Medicare's interest is by the deposit of cash, into a dedicated interest bearing account, for the amount required to fund all related future Medicare covered medical expenses and Medicare covered prescriptions over the injured party's life. A Structured MSA is an alternative Workers Comp MSA (WCMSA) or Liability MSA (LMSA) funding device. A Structured MSA combines cash seed money equal to two years of Medicare covered expenses and anticipated near term major Medicare covered expenses (e.g. surgery anticipated next year, replacement of wheelchair) with annual structured annuity payments for the life expectancy set forth in the MSA. MSA's can be funded with temporary life annuities, life annuities or annuities with a period certain. More information on these different types of structured annuities can be found here.

The Center for Medicare and Medicaid Services (CMS) has stated that all workers' compensation cases where the injured party is a Medicare recipient or is expected to be a recipient within 30 months of date of settlement, or if the amount of settlement is over $250,000, Medicare' s interests must be considered. A Medicare Set-Aside Allocation amount is determined through the analysis of the particular case. Medicare considers the allocation to

be the primary fund for paying Medicare covered expenses compensable to the injury. Once the allocation amount is exhausted, Medicare becomes the primary payor of the Medicare covered expenses for the compensable injury.

42 U.S.C. Sec 1395Y provides the following:
  • The Centers for Medicare and Medicaid Services' interest be protected
  • The Centers for Medicare and Medicaid Services have monetary rights against plaintiffs, plaintiff attorneys and plaintiff advisors when the services' interest is not protected
  • The Centers for Medicare and Medicaid Services have double recovery rights against insurance carriers, their legal counsel and their advisors when the interest of the services' is not protected
The above can be achieved by depositing money into an interest bearing account in the amount of the Medical Set-Aside Allocation ("MSA") Alternatively, a Structured MSA allocation is possible. A Structured MSA combines cash seed money with a structured settlement annuity and periodic payments are made on a defined schedule to cover annual Medicare eligible expenses in future years. Structured settlement annuities with their rated age capabilities and inherent guarantees (annuities are a form of Insurance) make them ideally suited for the task of funding the life contingent future payments. Meaningful savings are possible though the use of Structured MSAs, with or without rated ages, particularly on longer duration obligations. In order to correctly perform this task one must obtain the following:
  • Independent Medical Needs Assessment through a Life Care plan
  • Independent Economic Present Value calculation based on generally accepted method of evaluation

We have relationships with other independent firms who assist in providing the services required to help keep you in compliance. Please contact us for details.

Call at 888-325-8640 for a Structured MSA quote and to discuss your options. We quote Structured MSAs for both workers compensation and liability cases.

Category: Insurance

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