FAQs

Medicare Set Asides

What is a Medicare Set Aside?

CMS states that all parties in a workers’ compensation case have significant responsibilities under the Medicare Secondary Payer laws to protect Medicare’s interests when resolving cases that include future medical expenses. The recommended method to protect Medicare’s interests is a Workers Compensation Medicare Set Aside (WCMSA).

“A [Medicare Set Aside] allocates a portion of the [workers’ compensation] settlement for all future work-injury-related medical expenses that are covered and otherwise reimbursable by Medicare.” See Workers’ Compensation Medicare Set-Aside Reference Guide, v3.1, sec. 19.2.

The MSA contains 3 essential elements:

Can I spend my Medicare Set Aside money?

 

“Once your WCMSA account is set up, you can ONLY use it to pay for medical treatment or prescription drugs related to your WC claim, and ONLY if the expense is for a treatment or prescription Medicare would cover. This is true even if you are not yet a Medicare beneficiary (not yet enrolled in Medicare).” See Self-Administration Toolkit for Workers’ Compensation Medicare Set-Aside Arrangements, sec. 4. “A WCMSA allocates a portion of the WC settlement for all future work-injury-related medical expenses that are covered and otherwise reimbursable by Medicare (“Medicare covered”).” See Workers’ Compensation Medicare Set-Aside Reference Guide, v3.1, sec. 3.0.

Funds from an MSA cannot be utilized for anything other than treatment related to an underlying injury otherwise covered by Medicare. If the funds are spent on other things, there may be issues with respect to Medicare coverage. “ related to medically necessary services and prescription drug expenses for the WC settled injury or illness, Medicare will deny all WC-injury-related claims until the WCMSA administrator can demonstrate appropriate use equal to the full amount of the WCMSA.” See Workers’ Compensation Medicare Set-Aside Reference Guide, v3.1, sec. 17.3.

What is a Medical Cost Projection?

Simple Answer: A Medical Cost Projection (MCP) typically consists of funds allocated for future medical expenses, regardless of whether they would be covered or not by Medicare. An administrator can manage MCP accounts for all sorts of medical care. In many cases, an MSA will be established along with an MCP that is designed to pay for healthcare items the MSA does not cover. Unlike an MSA, if your MCP funds exhaust, Medicare does not step in as primary payor.

A settlement agreement could also include a Medical Cost Projection (MCP), which consists of funds designated for medical expenses but that are for items that either Medicare would not cover or that are not related specifically to the injury. Sometimes these accounts are referred to as “Non-Qualified” medical expense accounts, meaning the medical expenses in this projection would not qualify to be covered by Medicare so that they are not in the MSA. These accounts, when administered by a professional administrator, may also be referred to as Medical Custodial Accounts. This type of projection account does not carry reporting requirements to Medicare and has more freedom regarding treatments. One of the major differences is that with an MCP, if you exhaust, Medicare does not step in as the primary payor.

When do you need a Medicare Set Aside?

Simple Answer: An MSA is just an organized way to show Medicare that you took their interests into consideration at the time of settlement. An MSA is never required, but many parties to a settlement choose to specifically put together an allocation report showing items that are related to the injury and would be covered by Medicare. The report is called the MSA. MSA’s can be submitted to Medicare for review and approval if they are significant to meet Medicare’s review thresholds; in any event, the process of review and approval is voluntary. Getting approval just means Medicare has validated the amount set aside is accurate. 

Under Section XVIII of the Social Security Act, on any injury settlement, “Medicare’s interests” must be taken into consideration. It is never required, but often parties to a settlement will choose to put together a medical allocation report that specifically lays out the costs that Medicare would cover and that are related to the injury in a MSA report.

Medicare has offered to review and approve the amounts of these allocation reports only when the injured party is Medicare eligible or will potentially be Medicare eligible in the next 30 months and the amounts are significant enough for review. While Medicare has offered to review significant cases, the review process is entirely voluntary. The thresholds for review are:

1) • The claimant is a Medicare beneficiary and the total settlement amount is greater than $25,000.00; or

2) • The claimant has a reasonable expectation of Medicare enrollment within 30 months of the settlement date and the anticipated total settlement amount for future medical expenses and disability/lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.00

An individual is eligible for Medicare after they turn 65 or they can be under the age of 65 but are receiving Social Security Disability Insurance (SSDI). There can also be exceptions to the rule in some settlement cases.

What are the rules and regulations for the administration of Medicare Set Asides?

Simple Answer: Injured parties:

  • Are only allowed to spend their MSA funds on Medicare-covered treatments related to their injury.
  • Must place MSA funds in a separate, interest-bearing bank account
  • Must keep copies of bills & receipts
  • Must report all expenses they used their MSA funds on to CMS each year and in the case their funds run out
  • Must only pay the state fee schedule or “usual and customary” pricing for treatments & prescriptions

There are a number of complex rules to follow in the administration of MSAs. These are detailed in CMS’ WCMSA Reference Guide and its Self Administration Toolkit. An administrator, like Ametros, offers products to ensure your account is used and reported properly. CMS “highly recommends” the use of a professional administrator.

The most basic rule to keep in mind is that the injured party is only allowed to spend their MSA funds on Medicare-covered expenses directly related to their injury. Secondly, the injured party needs to keep track of all the expenses to report to Medicare that they used the funds properly.  This is important so that, in the case the MSA funds run out, Medicare will agree to begin coverage for injury-related treatment.

To provide more detail step by step: the MSA funds must be placed in a separate, interest-bearing bank account.

The injured party needs to keep copies of all bills and receipts, and keep detailed reporting on every expense they incurred with their MSA funds. This report must be sent to The Centers for Medicare and Medicaid (CMS) on a yearly basis in what is called an annual attestation. In addition, if the MSA funds run out, the injured party must file a temporary depletion form (if they will receive future MSA annuity payments), or permanent exhaustion form to CMS if they are permanently out of funds.

The injured party should only pay the state fee schedule or  the”usual and customary” price for treatments and prescriptions, which many times can be difficult to calculate and request from providers. If the injured party pays above the fee schedule, they could potentially end up having to repay Medicare for the cost of treatment above and beyond the fee schedule.

Failure to report to Medicare and to use the MSA funds properly will result in Medicare denying to pay for treatments that are related to the injured party’s injury thereby, jeopardizing their Medicare benefits.  Regardless of whether the injured individual is currently on Medicare, it is essential that their use of MSA funds is properly reported to the government.

What happens when I exhaust my Medicare Set Aside money? Will Medicare pay?

Simple answer: When MSA funds are exhausted, Medicare will begin to pay for all covered items related to your injury, only if you have properly managed your MSA funds and reported your spending to Medicare, and if you are enrolled as a beneficiary on Medicare. If Medicare steps in to begin covering you for treatments related to your injury, you will be covered just like any other Medicare beneficiary and subject to corresponding co-pays, coinsurance and deductibles.

If your MSA funds run out and 1) the funds were exhausted properly according to Medicare’s guidelines, and 2) you reported your use of the funds properly, then Medicare would step in as the primary payor for your future medical expenses related to the specific injury.

If Medicare steps in to begin covering you for treatments related to your injury, you will be covered just like any other Medicare beneficiary and subject to corresponding co-pays, coinsurance and deductibles.

Medicare will only pay if the injured party has previously enrolled in Medicare during an enrollment period, or have managed their MSA correctly (rules and regulations stated below). If someone is not properly spending their MSA funds or not reporting properly, they are jeopardizing their future Medicare benefits for injury-related care. Medicare states it will deny paying for treatments if it cannot track the proper use and exhaustion of the MSA funds.

If care is denied, the injured party will need to replenish its MSA account for items that were unaccounted for so that it can correct its reporting to Medicare. The injured party should also consider contacting a professional administrator for help.

Is getting an official Medicare Set Aside report from a third-party vendor required?

No. An attorney or adjuster or other party can come up with the amount that should be set aside. Many parties to settlement elect to use a third-party vendor due to their expertise in following Medicare’s guidelines for how to come up with the amount and the fact that they are an independent party. Medicare has provided extensive guidelines on how to create a MSA. Check the WCMSA Reference Guide for more information.

Is getting the Medicare Set Aside reviewed and approved by Medicare required?

No. Medicare has offered a voluntary submission and review process for MSAs that meet its thresholds. For MSAs that do not meet the review thresholds, Medicare will not even review them. For MSAs that do meet the review thresholds, the parties to the settlement can decide if they would like to submit the report to Medicare so that Medicare can review and approve the amount. The benefit to having the MSA reviewed and approved is that Medicare has deemed it sufficient to cover its “interests” in the case that the funds may exhaust in the future. If the MSA is never reviewed and approved, Medicare has never deemed it sufficient and so there is still some level of uncertainty over if Medicare will accept the amount as sufficient.

What if my Medicare Set Aside was never reviewed and approved by Medicare?

Many MSA’s cannot be reviewed and approved by Medicare because they are below the thresholds for review. Sometimes, parties to a settlement choose not to submit even large MSA’s to Medicare for review. The review and approval process is voluntary. As long as the amount set aside is reasonable as to be deemed sufficient by Medicare and the reporting is done accurately, then Medicare will step in to become the primary payer if the MSA funds run out.

Is getting an annuity for my Medicare Set Aside required?

No. However, many parties to a settlement recommend annuities as a way to provide the injured party with security of future payments. Medicare does allow for MSAs to be annuitized and will review and approve the seed amount (initial funding provided to the injured party) and annual payment amounts.

If the MSA submitted to Medicare is approved as a lump sum, then it cannot be changed to an annuity unless it is re-submitted for approval. On the other hand, if the MSA is approved as an annuity, the parties to a settlement can decide to change to a lump sum without notifying Medicare.

What can I use my Medicare Set Aside account on?

The injured party can use their MSA funds on Medicare-approved expenses related to their injury. This can include doctor bills, prescriptions, durable medical equipment, home healthcare, and more. The injured party cannot use their MSA funds for anything other than these expenses.

Are my Medicare Set Aside funds taxed?

In most cases, the entire amount paid out in a personal physical injury settlement is non-taxable. So, your MSA funds, as part of that settlement are also not taxed upon receipt.

The injured party is responsible for taxes on interest earned on their MSA funds. If the interest earned is accrued over $10, typically the bank will provide the injured party a 1099-INT to use in their tax filings. Interest income taxes can be paid for out of the MSA account per Medicare’s guidelines.

What happens if I don’t properly manage my Medicare Set Aside account?

Simple answer: If you do not properly manage your MSA account, you could severely jeopardize Medicare paying for your future medical care. Consequences include: denial of future bills from Medicare if your funds exhaust and being required to repay your MSA account for expenses that were paid for that are not covered by Medicare. Medicare reserves the right to have reporting for up to the entire settlement amount on medicare covered treatments before Medicare agrees to begin covering injury-related bills.

If the injured party doesn’t properly manage their MSA account, Medicare will deny paying for their injury-related treatment until the reporting is corrected. To do so, the injured party will have to pay back any amount that was used on an improper expense not relating to their injury back into the MSA account.

Mismanaging the MSA account will jeopardize the injured party’s future Medicare benefits; for this reason, it’s important to be careful and seek assistance. Medicare “highly recommends” the use of a professional administrator.

How can Ametros help?

Ametros’ service, CareGuard, helps individuals manage and make the most of their settlement funds. CareGuard is a full professional administration service, where we take care of everything for the injured party. The MSA funds are placed in an interest-bearing account under the injured party’s name, and we act as the custodian of the account.

The injured party receives a CareGuard card that works like a traditional insurance card, and by showing it at doctors or pharmacies, it automatically ensures that the injured party will receive maximum discounts through our group purchasing discounts, and all the bills will be sent to us. We pay all the bills on behalf of the injured party and ensure compliance with Medicare by completing all required reporting.

With CareGuard, the injured party can treat with any doctor or pharmacy that they would like to without undergoing any utilization review. In addition, CareGuard has a team of Care Advocates that provide the injured parties with 24/7 support to help coordinate their care.

Why is professional administration recommended for an Medicare Set Aside?

Simple Answer: The Centers for Medicare & Medicaid (CMS) highly recommends including professional administration in the case of an MSA. Professional Administration can help take the burden off the injured party when it comes to reporting to CMS, tracking funds, and managing funds.

The Centers for Medicare and Medicaid (CMS) updated their Workers’ Compensation Medicare Set-Aside (WCMSA) Reference guide in July of 2017 to include professional administration in Section 17.1. It now states, “It is highly recommended that settlement recipients consider the use of a professional administrator for their funds.” MSA professional administration is recommended because, as stated above, there are many rules and regulations that go into administering a Medicare Set Aside account, and it is very easy for an injured party to risk their Medicare benefits by mismanaging their account.

At Ametros, our goal is to create a seamless process for the injured party to protect their Medicare benefits once they settle their case with our professional administration service, CareGuard. With CareGuard, the injured party doesn’t have to ever touch a bill, or worry if they are keeping up to date with their Medicare reporting. The injured party will always have their Medicare benefits intact when they choose to settle with CareGuard.

What if I want to self-administer my Medicare Set Aside?

Injured parties can elect to administer their own MSA. This is NOT what Medicare recommends. However, there is a 31-page Self Administration Toolkit available and the injured party should also become familiar with the WCMSA Reference Guide as well as the Federal Medicare Secondary Payer Act, 42, U.S.C. §1395 et seq, as amended from time to time.

Ametros’ Amethyst service is designed to help individual self-administer with support. It helps the injured party maximize their medical funds, but instead links to the injured party’s own personal bank account. The injured party receives the Amethyst card that works the same as a traditional insurance card. This way the injured party will always remain in control of their settlement funds, but they are still receiving our help, support, and savings as they would with CareGuard.

What happens to unused Medicare Set Aside funds?

Funds from a Medicare Set Aside (MSA) account must be available to pay for a claimant’s medical treatment related to their underlying workers’ compensation claim otherwise covered by Medicare “during the course of the claimant’s life.” See Workers’ Compensation Medicare Set-Aside Reference Guide, v3.1, sec. 3.0.

The Centers for Medicare & Medicaid Services Self Administration Toolkit indicates that:

If you have funds left over at the end of a year, they remain in the account and are carried forward to the next year. The following year, you will be able to use the annual deposit money as well as whatever was carried forward. If there is excess money in that next year, that too is carried forward, and the account is used in this manner until all the funds accumulated in it are appropriately used up.

See Self-Admin Toolkit, v1.3, sec. 11. See also Workers’ Compensation Medicare Set-Aside Reference Guide, v3.1, sec. 19.3.1.

Following the death of a claimant / injured party, and if there’s unused funds left over, CMS has the right to be reimbursed for any outstanding covered medical charges. Providers have up to twelve (12) months from when the service was rendered. “Then, any amount left over in the WCMSA may be disbursed pursuant to state law, once Medicare’s interests have been protected. This may involve holding the WCMSA open for some period after the date of death, as providers, physicians, and other suppliers are permitted to submit their initial bill to Medicare for a period of 12 months after the date of service. Often, the settlement itself will dictate the appropriate dispersal of funds upon the death of the claimant and settlement of care-related expenses.” See Workers’ Compensation Medicare Set-Aside Reference Guide, v3.1, sec. 19.2.

How to Avoid a Medicare Set Aside?

The short answer is if your settlement includes future medical expenses and there’s likelihood a cost-shift could occur to Medicare (i.e. Medicare could reasonably be expected to pay for injury-related medicals), then it is not advised to attempt to avoid a Medicare Set Aside.

“All parties in a workers’ compensation case have significant responsibilities under the Medicare Secondary Payer (MSP) laws to protect Medicare’s interests when resolving cases that include future medical expenses.” See Medicare’s Medicare Set Aside official webpage. The MSP is federal law, including statutory, regulatory and policy provisions designed to prevent a cost-shift to the Medicare program.

Medicare is overseen by the Centers for Medicare & Medicaid Services (CMS). CMS’s only recommended method to protect Medicare’s interests is a Workers’ Compensation (MSA).

If parties to a settlement avoid incorporating an MSA, there are potential risks and exposure for this non-compliance. They include:

  • Disregard of the Settlement – If a settlement appears to represent an attempt to shift to Medicare the responsibility for payment of medical expenses for the treatment of a work-related condition, the settlement will not be recognized. See 42 CFR 411.46(b)(2).
  • CMS not bound by non-submitted MSA – If the parties to a Workers’ compensation settlement stipulate an MSA amount but do not receive CMS approval, then CMS is not bound by the set-aside amount specified by the parties, and CMS may refuse to pay for future medical expenses related to the work-related injury, even if they would ordinarily have been covered by Medicare. WCMSA Reference Guide, v3.1, Sec. 8
  • Refusal to Pay – CMS has the right to refuse to pay for certain expenses related to the workers’ compensation injury until the entire settlement is exhausted. See WCMSA Reference Guide, v3.1, Sec. 3.
  • Right of Recovery – Priority right of recovery against any entity that received a portion of the settlement payment. See WCMSA Reference Guide, v3.1, Sec. 3

How long does a Medicare Set Aside take?

The time-frame for preparation of a Medicare Set Aside (MSA) can vary. There are several factors which can play into how long it takes, including the severity of the injuries, complexity of the case, and volume of treatment records involved. Moreover, the availability of records to the MSA allocator / vendor may play in to how long it takes to finalize an MSA. Ametros is aware that industry standards of many of the MSA vendors seem to be between 3-5 business days. There are certain instances where MSA vendors may provide “rush” services to furnish an allocation quicker.

With respect to the Workers’ Compensation Review Contractor (WCRC) reviewing an MSA; if there’s no development of the case, it typically takes an average of 30 days for CMS to issue a decision.  However, CMS’s official timeframes are extended, as indicated in the WCMSA Reference Guide:

When you submit a WCMSA for review, CMS tries to review and decide on proposed settlements within 45 to 60 days from the time that all relevant documents are submitted.

See WCMSA Reference Guide, v.3.1, sec 15.1.

How is a Medicare Set Aside calculated?

In a Workers’ Compensation Medicare Set Aside (WCMSA) allocations are prepared on a case-by-case basis. In a WCMSA, only items and services related to the workers’ compensation injury otherwise covered by Medicare are included. Post-settlement treatment, prescription drugs, and items are calculated based upon a number of different sources and factors, including:

  • Applicable workers’ compensation fee schedules
  • Usual and customary charges
  • Actual charges (by reviewing claims payment and prescription drug payment histories)
  • Last two years of treatment records
  • Medical bills
  • Facility / provider fees

CMS also indicates that, “medical pricing may vary based on injury, age, location, and other factors. Each submission is reviewed independently of other submissions for claimants with the same injury and age. This accounts for any differences in WCMSA amount determination.” See WCMSA Reference Guide, v.3.1, sec 9.4.3.

Specifically, with respect to prescription drugs:

“The WCRC continues to price Part D drug products based on AWP and further based on brand or generic drug pricing. AWP pricing is pulled from a proprietary source, Truven Health Analytics’ Red Book database. The WCRC uses a program for drug pricing that uses Red Book flat files that are updated monthly.”

See WCMSA Reference Guide, v.3.1, sec 9.4.6.

For further and more detailed information on how WCMSAs are priced and allocated, please refer to the WCMSA Reference Guide.

When is a Medicare Set Aside necessary?

The short answer is that there are no statutory or regulatory requirements to prepare or submit a Medicare Set Aside (MSA) to the Centers for Medicare & Medicaid Services (CMS) for review or approval. However, CMS does mandate that Medicare’s interests are considered and protected in all workers’ compensation settlements which resolve medicals. The only sanctioned vehicle to accomplish this is an MSA.

“All parties in a workers’ compensation case have significant responsibilities under the Medicare Secondary Payer (MSP) laws to protect Medicare’s interests when resolving cases that include future medical expenses. The recommended method to protect Medicare’s interests is a WCMSA [Workers’ Compensation Medicare Set Aside].” See Medicare’s Medicare Set Aside official webpage. The MSP is federal law, including statutory, regulatory and policy provisions designed to prevent a cost-shift to the Medicare program.

“A [Medicare Set Aside] allocates a portion of the [workers’ compensation] settlement for all future work-injury-related medical expenses that are covered and otherwise reimbursable by Medicare.” See Workers’ Compensation Medicare Set-Aside Reference Guide, v3.1, sec. 19.2.

CMS will voluntarily review proposed WCMSAs in order to determine if the proposed amount is sufficient to cover future Medicare-covered medical expenses related to the settlement. See WCMSA Reference Guide, v.3.1, Sec. 8, and 8.1. CMS will voluntarily review a WCMSA proposal in the following circumstances:

  • The claimant is a Medicare beneficiary and the total settlement amount is greater than $25,000.00; or
  • The claimant has a reasonable expectation of Medicare enrollment within 30 months of the settlement date and the anticipated total settlement amount for future medical expenses and disability or lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.00

CMS indicates their voluntary, yet recommended, WCMSA amount review process is the only process that offers both Medicare beneficiaries and Workers’ Compensation entities finality with respect to obligations for medical care required after a settlement. When CMS reviews and approves a proposed WCMSA amount, CMS stands behind that amount. Without CMS’ approval, Medicare may deny related medical claims, or pursue recovery for related medical claims that Medicare paid up to the full amount of the settlement. See WCMSA Reference Guide, v.3.1, sec 4.2.

How do I protect my Medicare Set Aside money?

A Medicare Set Aside (MSA) can either be funded in two ways:

  • Via lump-sum, where a single payment is made to fund the entire MSA; or
  • Structured settlement, where an initial deposit (or “seed” money) is made, followed by annual payments.

See Self-Admin Toolkit, v1.3, sec. 3.

There are distinct advantages to having an MSA funded via annuity. If an injured individual is a Medicare beneficiary, with a structured MSA, in the event funds are temporarily depleted in any given year, Medicare will provide for reimbursement for MSA covered healthcare treatment. See Self-Admin Toolkit, v1.3, sec. 11.

Regardless of how the MSA is funded, the funds should be placed and kept in an interest-bearing account and separate from any other personal checking or savings. See Self-Admin Toolkit, v1.3, sec. 3 and WCMSA Reference Guide, v.3.1, sec 17.2. Moreover, while not required, the Centers for Medicare and Medicaid Services (CMS) recommends that the funds should be in an account “…insured by the Federal Deposit Insurance Corporation (FDIC)… and [that the bank] does not charge fees when you have a low balance, and that you can write checks from easily.” See Self-Admin Toolkit, v1.3, sec. 2.

It is imperative, in order to avoid issues with Medicare denying treatment or the injured individual risking their benefits, that funds are only expended on Medicare-covered treatment which is related to the underlying injury. See Self-Admin Toolkit, v1.3, sec. 4.

With respect to administration, an MSA can either be administered by the injured party (if permitted by state law) or by a professional administrator. See WCMSA Reference Guide, v.3.1, sec 10.6. Importantly, CMS indicates that “[a]lthough [injured parties] may act as their own administrators, it is highly recommended that settlement recipients consider the use of a professional administrator for their funds.”

With respect to protecting MSA funds, Ametros specifically has a process with its banking partners whereby they’ll hold on any direct garnishments from Ametros’ Members MSA accounts (child support being the most frequently), and have been 95% successful in working with the states requesting garnishment to get the MSA funds exempted.  Having a professional administrator overseeing an MSA account as a stopgap is a great layer of protection that simply doesn’t exist for self-administered cases.

How do I involve a Medicare Set Aside in a liability case?

Ever since Workers’ Compensation Medicare Set Asides (WCMSA) were formalized with the 2001 “Patel Memo,” there has been varying interpretation regarding the applicability of post-settlement Medicare Secondary Payer (MSP) considerations in liability claims. The Centers for Medicare and Medicaid Services (CMS) have taken the general position, for over a decade now, that Medicare’s interest should be considered when resolving a liability claim. This position has been established through the years, via:

  • Town hall calls;
  • Memoranda such as the May 25, 2011 “Stalcup” and September 29, 2011 memos;
  • Rulemaking process initiated in 2012 and subsequently discontinued in 2014;
  • Solicitation and statement of work for the Workers’ Compensation Review Contractor (WCRC) from 2016 and 2017 indicating the contractor’s ability to review Liability Medicare Set Asides (LMSAs).

At the close of 2018, CMS issued a notice of an anticipated rulemaking for future medicals, which has been widely speculated to address LMSAs. Subsequently, in 2019, the dates for issuing the proposed rule were extended – most recently to August 2020. Industry stakeholders will be keeping a close eye on when and whether CMS decides to institute the rulemaking process.

Until then there likely should be a case-by-case analysis balancing several factors, including the reasonable likelihood of a cost-shift to Medicare, the Medicare status of the plaintiff, and risk-management philosophy of the payer, and parties.

Can a Medicare Set Aside be reduced or released if an injured individual’s condition improves?

There is no policy or process which allows an individual with a Medicare Set Aside (MSA) account to access or release funds during their lifetime other than for what is authorized under Medicare’s policies, i.e. to pay for healthcare related to the underlying work injury that is otherwise covered by Medicare.

Prior to the Workers’ Compensation Medicare Set-Aside (WCMSA) Reference Guide (created in 2013, and now up to version 3.1 as of May 11, 2020), the Centers’ for Medicare & Medicaid Services (CMS) would issue policy guidance and updates via ad hoc memoranda. Currently, however, all previous memos have been supplanted by the WCMSA Reference Guide. Per Sec. 1.0 in the WCMSA Reference Guide:

This guide reflects information compiled from all WCMSA Regional Office (RO) Memoranda issued by CMS, from information provided on the CMS website, from information provided by the Workers Compensation Review Contractor (WCRC), and from the CMS WCMSA Operating Rules. The intent of this reference guide is to consolidate and supplant all historical memoranda in a single point of reference. Please discontinue the reference of prior documents. (emphasis added).

In the April 21, 2003 CMS Memo, at Question / Answer #11 the following was addressed:

11) If a beneficiary or injured individual’s physical condition substantially improves, may the administrator of the Medicare set-aside arrangement release or reduce the amounts of the set-aside?

Answer: The administrator of the CMS approved Medicare set-aside arrangement cannot release or reduce the set-aside amounts without approval from CMS. If the treating physician concludes that the beneficiary’s medical condition has substantially improved, then the beneficiary (or his/her representative) may submit a written request to the appropriate CMS RO asking for a reduction of the Medicare set-aside arrangement. This request must include supporting documentation from the treating physician(s). Once the RO receives all pertinent documentation, the RO will then evaluate the request and make a decision. The RO decision is final and not subject to administrative appeal.  

In the subsequent July 11, 2005 CMS Memo, the above Q & A was replaced by the following:

Q10. Beneficiaries that Request Termination of a WCMSA Account – May a claimant have any or all of a WCMSA released for personal purposes under any circumstances?

A10. The administrator of the CMS-approved WCMSA should not release set-aside funds for any purpose other than the purpose for which the WCMSA was established without approval from CMS. However, if the treating physician concludes that the beneficiary’s medical condition has substantially improved, then the beneficiary (or the beneficiary’s representative) may submit a new WCMSA proposal covering future expected medical expenses. Such proposals must justify at least a 25% reduction in the outstanding WCMSA funds. In addition, such proposal may not be submitted until at least five years after a previous CMS approval letter and should be accompanied by all supporting documentation not previously submitted with the original WCMSA proposal. The CMS decision on the new proposal is final and not subject to administrative appeal. The above proposals shall be submitted to CMS c/o COBC. If CMS determines that a 25% or greater reduction is justified, CMS will issue a new approval letter. After CMS issues a new approval letter, any funds in the current WCMSA in excess of the newly calculated amount may be released to the claimant.

Notwithstanding the above, as noted previously here, the WCMSA Reference Guide (and Self-Administration Toolkit) are the controlling document(s) with respect to policies and procedures for WCMSAs. Again, “[o]nce your WCMSA account is set up, you can ONLY use it to pay for medical treatment or prescription drugs related to your WC claim, and ONLY if the expense is for a treatment or prescription Medicare would cover. This is true even if you are not yet a Medicare beneficiary (not yet enrolled in Medicare). Self-Administration Toolkit, Sec. 4.

“The goal of establishing a WCMSA is to estimate, as accurately as possible, the total cost that will be incurred for all medical expenses otherwise reimbursable by Medicare for work-injury-related conditions during the course of the claimant’s life, and to set aside sufficient funds from the settlement, judgment, or award to cover that cost.” WCMSA Reference Guide, Sec. 3.0.

“If you have funds left over at the end of a year, they remain in the account and are carried forward to the next year. The following year, you will be able to use the annual deposit money as well as whatever was carried forward. If there is excess money in that next year, that too is carried forward, and the account is used in this manner until all the funds accumulated in it are appropriately used up. Self-Administration Toolkit, sec. 11.

In sum, there is currently no policy which allows for an individual to access or release funds from their MSA other than to pay for medical treatment or prescription drugs related to the underlying claim which are otherwise covered by Medicare. This is the case even if an individual’s healthcare improves and they don’t require use of their MSA funds.

Can't find the answer you were looking for?

Our team will do their best to help find what you’re looking for.
Translate »