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.
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.