When it comes to Medicare Set-Asides (MSA), an annuity is not required. However, many involved in a settlement choose annuities for the security of future payments. Medicare permits MSAs to be annuitized, reviewing and approving both the initial seed amount and annual payments.
Choosing Between Lump Sum and Annuity:
Annuities for MSA: MSAs can be structured as annuities, allowing long-term financial planning for the injured party. An annuity provides the assurance of regular future payments, which can offer peace of mind.
Lump Sum: If a Medicare Set-Aside is approved as a lump sum, it cannot be changed to an annuity without re-submitting for approval. Conversely, if initially approved as an annuity, the settlement parties can opt to switch to a lump sum without notifying Medicare.
Considering a Change
- From Lump Sum to Annuity: Requires re-approval from Medicare.
- From Annuity to Lump Sum: Change is allowed without Medicare notification if initially approved as an annuity.
Further Reading and Details
For more detailed insights, including complex terms, you may refer to the WCMSA Reference Guide found on the CMS website.
Disclaimer:
The information provided here is for general educational and informational purposes only and is not intended nor does it constitute legal, tax or financial advice. We're happy to explain general concepts and navigate resources; however, our guidance should not be relied upon as a substitute for advice from a qualified attorney, tax advisor, financial professional or other licensed advisor. Decisions regarding your specific circumstances should be made in consultation with the appropriate professional.
