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.