Workers’ Compensation Medicare Set Aside Arrangements (WCMSAs) have long helped bridge the gap between a workers’ settlement and their future Medicare benefits. But for many injured workers, the technical details of these arrangements can feel confusing and overwhelming. States are increasingly recognizing that meaningful worker protection involves more than just getting the details and paperwork right. It also involves education, transparency, and informed participation.
Recent updates to New Mexico’s and Tennessee’s workers’ compensation websites reflect this evolving perspective. Through the direct education of injured workers and other stakeholders about WCMSAs, Medicare’s interests, and the role of professional administration, these states are acknowledging what many hard‑learned cases have already shown: funding a WCMSA is only half the job.
States’ Role in a Federal Compliance Landscape
The Medicare Secondary Payer (MSP) Act makes it clear that Medicare is a secondary payer whenever another entity, such as a workers’ compensation insurer, is responsible for medical costs. While Medicare oversight rests with the federal government, workers’ compensation remains a state‑based system, with settlement approvals, disclosures, and worker protections largely governed at the state level.
This structural reality places state workers’ compensation regulatory agencies in a unique position. Even without imposing mandates, states are oftentimes in the best position to ensure injured workers understand the long‑term obligations that accompany a WCMSA and the real‑world consequences of getting administration wrong.
Historically, state settlement review has concentrated on assessing fairness at the time of settlement. In many jurisdictions, workers’ compensation judges, boards, or commissions review settlements to determine whether they are adequate or are in the injured worker’s best interests. However, increased attention has emerged around the long‑term compliance obligations that WCMSAs create. These obligations last well beyond the period of state oversight, creating lifetime compliance requirements for the injured worker.
New Mexico: Elevating Awareness Through Guidance
New Mexico has taken meaningful steps to make Medicare‑related settlement considerations more visible to injured workers and practitioners. The New Mexico Workers’ Compensation Administration (WCA) has recently enhanced its publicly available resources to better explain the interaction between workers’ compensation settlements and Medicare obligations, including references to Medicare Set‑Asides and post‑settlement responsibilities. [workerscomp.nm.gov]
Rather than treating WCMSAs as an abstract federal issue, New Mexico’s approach reflects an understanding that uninformed workers are at the greatest risk. When injured workers close out future medical benefits without appreciating Medicare’s standards, the consequences primarily fall on them.
Tennessee: Explicit Education on WCMSAs and Professional Administration
Tennessee has also updated their website by offering plain‑language guidance that directly addresses WCMSAs, Medicare compliance, and the risks of mismanagement. Tennessee’s Bureau of Workers’ Compensation now provides educational materials explaining:
- Why Medicare and TennCare will not pay when workers’ compensation remains responsible
- What a WCMSA is and how it functions
- That CMS rules must be followed even after settlement
- That professional administration is a recognized and recommended compliance option [tn.gov]
Crucially, Tennessee’s materials do not merely warn of penalties, they offer solutions. The solutions explicitly acknowledge that WCMSA rules are complex and that professional administrators can help injured workers remain compliant. This framing shifts the conversation toward worker protection.
Why Education Complements Enforcement
CMS has significantly enhanced its ability to detect non‑compliance, specifically through expanded Section 111 reporting requirements that now include disclosure of WCMSA amounts. Once a settlement is reported, CMS does not remain passive. Through its Notice of Settlement Received letter, CMS affirmatively informs beneficiaries that they are aware of their WCMSA and that they are responsible for administering the account correctly in accordance with Medicare’s guidance.
However, enforcement alone does little for workers who unknowingly misuse funds years after settlement. Improper WCMSA administration, such as paying non‑covered expenses or failing to report annually, can result in Medicare denying reimbursement for injury‑related care even after the WCMSA is exhausted. In determining whether Medicare’s interests were protected, CMS does not distinguish between an underfunded WCMSA or one that was mismanaged.
Recognizing this risk, CMS has stated that it highly recommends consideration of professional administration to help ensure WCMSA funds are properly used, and Medicare’s interests remain protected. [cms.gov]
States that proactively educate stakeholders, prior to settlement, help prevent negative outcomes before they occur.
Professional Administration as a Worker Protection Tool
Both CMS guidance and state‑level educational efforts increasingly acknowledge a reality that many injured workers discover too late: self‑administration is risky.
Professional administrators bring structure, reporting discipline, Medicare coverage expertise, and continuity of care. This is especially true for younger workers or those with complex medical needs. When states mention or endorse professional administration as an option, they are not limiting worker choice; they are exposing workers to information necessary to make an informed one.
Tennessee’s explicit recognition of professional administration as a compliance solution signals a broader trend toward treating WCMSA administration as a worker protection issue, as opposed to a niche compliance matter.
A Blueprint for Other States
New Mexico and Tennessee are not imposing new mandates. They are doing something arguably more effective; they are educating stakeholders at the point of decision. Other states can follow this model by:
- Documenting the injured worker’s understanding and acknowledgment of their WCMSA obligations within the settlement
- Publishing plain‑language explanations of WCMSA responsibilities
- Directing workers to authoritative CMS resources
- Identifying professional administration as a compliance option, not an afterthought
These steps strengthen worker protection without intruding on federal authority or settlement flexibility.
WCMSAs Beyond Settlement
WCMSAs sit at the intersection of federal Medicare law and state workers’ compensation systems. Although settlements conclude litigation and address parties’ obligations at the time of resolution, injured workers retain ongoing responsibility for complying with Medicare requirements that are complex and continue to evolve.
Through updated guidance and educational materials created to address WCMSAs and professional administration, New Mexico and Tennessee reflect an emerging policy emphasis. These efforts recognize worker education as a critical safeguard against post‑settlement harm and an important component of worker protection.
As additional states show interest, WCMSA compliance may increasingly shift from being viewed as a technical post‑resolution consideration to being understood as an essential measure for protecting injured workers’ future healthcare needs.
