On July 13, 2026, the Centers for Medicare & Medicaid Services (CMS) released Version 4.6 of the Workers’ Compensation Medicare Set-Aside (WCMSA) Reference Guide, the agency’s primary policy resource governing Medicare Set-Asides (MSAs).
While the latest update does not introduce sweeping policy changes, it includes important revisions to CMS communications that further emphasize proper MSA administration and reinforce the growing importance of professional administration in maintaining compliance with Medicare requirements.
In Version 4.6, CMS updated language in two key documents:
- Approval Letter
- Notice of Settlement Received Letter
Both documents are located in Appendix 5 of the WCMSA Reference Guide. The sample Approval Letter begins on page 79, while the Notice of Settlement Received Letter begins on page 94.
Changes to the Approval Letter
The Approval Letter is issued by CMS following voluntary submission and review of a WCMSA by CMS’ Workers’ Compensation Review Contractor (WCRC). Additional language has been added to the Approval Letter on pg. 2 of the letter. In the Reference Guide, the new language can be found on pg. 80 of the Guide. It reads as follows:
When a WCMSA is funded as a structured settlement (settlement monies paid out in yearly installments over a number of years), any WCMSA funds that are not used in a given year must remain in the account to pay for related medical care during following years. If available WCMSA funds for a particular year (including the current year’s full structured payment plus any prior year’s remaining funds plus interest) have been properly spent, Medicare will pay for covered items and services that are related to the workers’ compensation claim for the remainder of that year until the scheduled date for the next year's deposit into the WCMSA account. Bills should be paid in the order they are received to help the Benefits Coordination & Recovery Contractor (BCRC) confirm that the funds have been temporarily exhausted (properly spent for that year).
The above language provides guidance around MSAs that are funded via structured settlement. Funding an MSA through a structured settlement can provide significant benefits to settling parties, including guaranteed recurring payments to cover future medical expenses and substantial upfront savings at the time of settlement.
When an MSA is funded through a structured settlement, an initial deposit, commonly referred to as the “seed” amount, is established to cover the first two years of projected medical expenses, as well as the cost of the first surgery or procedure for each covered body part. This initial deposit is typically followed by a series of annual annuity payments that fund the remainder of the MSA over time. See WCMSA Reference Guide, Section 5.2.
If, during any given year, the available MSA funds are temporarily depleted or if the MSA becomes permanently exhausted, Medicare may begin paying for otherwise covered, injury-related medical expenses as the primary payer, provided the MSA funds were properly administered and spent in accordance with CMS requirements. Beneficiaries must be able to demonstrate compliance through appropriate recordkeeping and reporting, including the submission of annual attestations to CMS’s Benefits Coordination & Recovery Center (BCRC). See WCMSA Reference Guide, Section 5.2.
As CMS reminds us here with this added language, when an MSA is funded via structured settlement:
- Any funds that aren’t used need to carry over;
- Medicare will step in and pay primary so long as funds are properly exhausted;
- Bills should be paid in the order they received to ensure proper coordination of benefits.
Of note, substantially similar language has long appeared in the WCMSA Administration Agreement, a form letter that accompanies the Approval Letter and provides a high-level overview of a beneficiary’s post-settlement WCMSA administration responsibilities. The agreement is included in Appendix 6 of the WCMSA Reference Guide and can be found beginning on page 30. The inclusion of comparable language in the Approval Letter further reinforces CMS’s ongoing focus on proper MSA administration and beneficiary compliance.
Changes to the Notice of Settlement Received Letter
The Notice of Settlement Received Letter is a more recent addition to CMS’ forms and made its debut on April 7, 2025 with version 4.3. of the WCMSA Reference Guide. It issued just after WCMSA TPOC reporting went live.
The Notice of Settlement Received Letter, which is directed to the injured individual, serves two primary purposes. First, it informs the beneficiary that Medicare has been formally notified of the workers’ compensation settlement and the existence of associated MSA funds. Second, it outlines the beneficiary’s ongoing post-settlement responsibilities, including proper MSA administration, accurate recordkeeping, and compliance with CMS reporting requirements. More broadly, the letter reflects CMS’s continued efforts to educate beneficiaries about their obligations under the Medicare Secondary Payer framework and to reduce the improper billing of Medicare for injury-related medical expenses that should be paid from MSA funds.
The added language can be found on page 2 of the Notice of Settlement Received Letter, under paragraph 1, and states:
We encourage individuals who have WCMSAs to take note of the following information, especially if they are enrolled in a Medicare Advantage plan and/or have Medicare Part D prescription drug coverage: CMS will let your Medicare Advantage or prescription drug plan know that a WCMSA has been approved on your behalf. However, CMS does not provide these plans with specific information about your specific treatments and medications that should be covered by your WCMSA. Your plan may contact you or your administrator to find out which expenses are covered by your WCMSA. If you do not respond to your Medicare Advantage or prescription drug plan’s investigation efforts, your coverage may be delayed or cancelled.
As Ametros noted in its article, “2026 & Beyond: Why Professional Administration of Medicare Set Asides Is Imperative,” “MSA data is no longer siloed within the confines of traditional Medicare Parts A and B. CMS is seeking coordination across Medicare Part C and Part D as well and directly informs Medicare Advantage and prescription drug plans, increasing the likelihood of downstream denials or recovery efforts if MSA funds are mismanaged.” The newly added language in the Notice of Settlement Received Letter appears to support this.
More than half of all Medicare beneficiaries are enrolled in a Medicare Advantage (Part C) plan and over 50 million individuals are enrolled in a Medicare Part D prescription drug plan.
Medicare beneficiaries with Part C or Part D coverage may put their benefits at risk if they improperly administer their MSA. These plans are receiving MSA-related data from CMS and are required to coordinate benefits, which may result in coverage denials if MSA funds are not properly managed. As the complexities of post-settlement compliance continue to grow, partnering with a professional administrator is the most effective way for injured individuals to protect their benefits and meet their obligations.
Takeaway: Professional Administration Is Necessary
The updates to the above-referenced correspondence highlight Medicare’s focus on post-settlement oversight of MSAs – specifically, the necessity of proper expenditure, coordination of benefits and accurate and timely attestation reporting.
The only way for an injured individual to achieve this, and for parties to a settlement to have assurances of post-settlement success, is to partner with a professional administrator. To learn more about how Ametros can help injured individuals and set your settlement up for success, please contact us at referral@ametros.com or give us a call 877-590-4467.
