Medicare Set-Asides (MSA)

Medicare Set-Asides

Negotiating the payment of future medical bills plays a vital factor in a favorable settlement for many claimants. Claimants who are currently on Medicare, or are planning on receiving Medicare in the near future need to follow specific guidelines with their future medical payments.

Medicare Secondary Payer provisions stipulate that if the proceeds of a lawsuit include funds for future medical expenses, Medicare will not pay for medical services until all such funds are appropriately expended. Essentially, Medicare becomes the secondary payer to the award or settlement.

Medicare Set-Aside

A Medicare Set-Aside (MSA) is how the government protects Medicare’s interests. A part of the settlement is put into the account to deal with future medical costs related to the claimant’s injury. After the account is depleted, the claimant can once again start receiving Medicare payments. The claimant’s estimated total cost of future medical care and medical history is reviewed to create a proposal with a recommended allocation amount.

Medicare Set-Aside Proposal Criteria

An expert can help pinpoint the amount to “set aside” in order to not over or under-fund the MSA. Currently only guidelines for reviewing Workers’ Compensation Medicare Set-Asides (WCMSAs) have been released.

WCMSA proposals must meet the following criteria to be reviewed by the CMS:

  • The total settlement amount is greater than $25,000 and the claimant is a Medicare beneficiary, OR
  • The claimant did not receive Medicare at the time of settlement but reasonably expects enrollment within 30 months of settlement date, and the total settlement amount is higher than $250,000.

CMS criteria continues to evolve, which is why it’s important to have professionals well-versed in this area on your side.

Funding A Medicare Set-Aside

There are two ways of funding a Medicare Set-Aside: Either through a lump or a structured settlement.

Cash Lump Sum: If a claimant decides to fund a Medicare Set-Aside (MSA) with a lump sum cash payment, then the entire MSA needs to be exhausted before Medicare resumes a primary payer role.

Cash and Structured Settlement Annuity: If the claimant decides on a structured settlement annuity, it works like this:
 

  • A smaller lump sum is employed as seed money to form the MSA. The lump sum equals the cost of the first surgical procedure or replacement, plus two years’ worth of annual payments.
  • The MSA is replenished with annual structured settlement annuity payments, and any remaining funds at the end of an annual period are added to the deposit for the next period.

How A Structured Settlement Annuity Saves Money

For example, say that ten months into the annual period, the claimant’s MSA funds are exhausted. If this occurs, Medicare picks up the medical costs for the last two months of the annual period, allowing the structured settlement annuity to make the next annual deposit and begin paying for medical costs again.

On average, funding with a structured settlement annuity saves claimant at least 25%, allowing the settlement proceeds to last longer. It is also usually less costly for the defendant or insurer to fund with a structured settlement annuity, making it a useful tool when resolving a claim. There are different annuity options available, each with different cost savings and its own set of guidelines on how and if payments are made when the claimant passes.

Contact Us Today

Jay Scarola has spent the last two decades helping catastrophically injured clients optimize their settlement proceeds through the long-term financial stability and security of settlement funds. If you are seeking to establish any kind of settlement, you may need a console to maximize financial security. Call Jay Scarola to talk about settlement trust services today.

Structured settlements give you peace of mind.

Claimants who choose to fund an MSA with a lump sum payment must deplete the entire MSA before Medicare resumes paying for injury-related medical care. For more information about Medicare Set-Asides, contact Sage Settlement Consulting today. 1Claimants who choose the structured settlement option to fund an MSA must make an initial deposit of “seed money” in the amount of the first surgical procedure or replacement and two years of annual payments. The structured settlement will then fund the MSA with annual deposits. Any funds remaining in the MSA at the end of the annual period will be carried forward to the next period.