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Top 10 MSA Self-Admin Mistakes to Avoid (Part III)

Why you should consider having your MSA Professionally Administered

We’re rounding out our three-part series on frequent mistakes injured individuals make when they self-administer their MSA.  In our second post [Part II], we focused on complications that arise with billing and the use of the funds over the medium to long-term.  In our first post [turn into a link], we pointed out some of the most basic and costly mistakes made.  Finally, today we’ll point out a few straightforward accidents that can have a big impact.

  1. Commingling your MSA funds with other accounts or investments.
  • Medicare requires that you place your funds in a separate interest-bearing bank account. A professional administrator will make sure are funds are set up appropriately so that every cent is accounted for and reported.

Often times, injured individuals skip the step of establishing a dedicated bank account for their MSA funds.  This may not seem like a big deal at first, but as the account is used for other expenses, it can be quite a challenge to separate out the items and produce reporting for Medicare.  In addition, depositing your MSA funds into a personal checking account that you also use for shopping, etc. means you may very well spend the money incorrectly by accident.

Likewise, while Medicare has not given specific guidance on placing MSA funds into investment vehicles, the safe play is to keep your funds in a standard checking or savings account.  We believe you a playing with fire if you put your funds into the market.  The issue is that most folks in the industry believe that Medicare will not accept that your MSA is smaller because you invested poorly.  Medicare views the MSA as a safeguard against having to use its funds, so it seems fair that Medicare would not look kindly upon injured individuals gambling with the money in the stock market.

At Careguard, each of our members gets a separate interest bearing saving account and we do not pool or invest your funds so that all the tracking is clean and your money is in the safest accounts available.

  1. Failing to notify Medicare properly when funds exhaust or replenish (if you have an annuity).
  • A professional administrator verifies you’ve reported exhaustion properly and also receives annuity checks and will report when your account is replenished. This way the hassle of keeping Medicare up-to-date is taken care of.

Medicare really becomes your pen pal when you get an MSA. They want to hear from you every time your MSA funds run out and every time you get another annuity check.   If you miss a beat, they will not be prepared to cover your healthcare if you have exhausted your funds and show up for a treatment.

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Medicare’s self-administration guide has a letter template for every time your funds run out and another letter template for every time your funds are replenished.  Some injured invididuals find themselves running out of MSA funds every year.  This means they need to send a letter twice a year to Medicare (not counting the annual reporting).  They also are often required to call Medicare to make sure they received the letter and are prepared to help cover costs when they go in for their next visit.  This is a lot of coordination and can be really exhausting for some injured individuals.  CareGuard takes care of all this seamlessly.

Even the most astute injured individuals sometimes get confused on what triggers the exhaustion and replenishment letters.  The math on exhaustion is important - it's when your total account balance runs out. A frequent confusion of MSA holders that have annuities is whether they technically "exhausted" their funds because they spent more than their annuity check for that year. This is a mistake.

Let's take an example. You have $25k in your MSA account. You receive a $10k annuity check this year. You spend $15k on MSA-related medical expenses. There is $20k left in your account at the end of the year. You do not need to report you exhausted your funds.

You only need to report exhaustion to Medicare when your aggregate account balance reaches zero. In other words, in the example above, if instead of $15k in expenses, you had $45k of expenses, then your total account balance would be zero and then you would be required notify CMS that you’ve exhausted your funds.

  1. Failing to report your MSA spending to Medicare annually.
  • Medicare expects to hear from you on the anniversary of your injury, every year for the rest of your life. The only exception is if you have notified Medicare that you have no funds remaining and not future annuity checks. As long as you have MSA funds or annuity payments expected, Medicare looks for your report. A professional administrator will ensure you never miss a report.

Last but not least, we end with the most essential requirement of the MSA.  The annual reporting to Medicare is the fundamental requirement that MSA holders need to fulfill to ensure their Medicare benefits are protected.  Unfortunately, many injured individuals forget the date of their settlement and file their reports late or not at all.  At CareGuard, we’ve seen Medicare accept reporting that is late, but it usually takes multiple phone calls and often times the injured individual is left waiting for approval for a medical treatment or prescription that Medicare needs to help cover.

The real challenge that some injured individuals face is, after a couple years of missing reporting, they don’t even know where to begin.  At CareGuard, we sometimes work with MSA-holders that have gaps in their reporting.  We do our best to clean up any old files they have and get them to Medicare and then we fulfill the reporting requirements from then on out to be able to show to Medicare that they are doing the right thing to get on track.

This concludes our series on MSA mistakes to avoid.  We hope you found some helpful information in these posts for you, your client, your family member, etc. with an MSA account.

At CareGuard, we’re constantly encountering new issues with MSA accounts and adapting our systems and team to address them to take the burden off of the shoulders of the injured individual.  After all, folks with MSAs have been through enough; they shouldn’t have to deal with the daily stress of Medicare compliance.  That’s what we’re here for!

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