What is a Medicare Set Aside? Video & Transcript

Medicare set-aside, or “MSA”, is an organized report that shows Medicare that you took their interests into consideration if you decide to settle an insurance claim with money that is meant to cover your ongoing medical costs. Ultimately a Medicare Set-Aside is an important way to make sure your Medicare benefits are preserved over time and that your medical coverage is not impacted negatively.

Let's take a closer look at how MSAs came to be, and how one can be involved in your case. To fully understand the dynamics of an MSA we must go back to the federal Medicare secondary payer statute put into place in 1980. This federal law made it clear that Medicare will always be the secondary payer for your medical bills, which means Medicare will only pay bills after other insurance, making them the second payer involved. Other forms of coverage, like your workers’ compensation insurance, liability insurance, or private insurance, will always be required to pay bills first. The same rule is true even when you accept a settlement from your insurance carrier. Your settlement funds must pay for your medical care first, before Medicare will pay for any bills. Medicare remains the secondary payer even after settlement.

You might wonder when is an MSA applicable. If you're injured and have coverage from a plan other than your health insurance, such as workers compensation, auto insurance, medical malpractice insurance, no-fault insurance, or liability insurance, and you are considering settling your insurance claim to receive money to cover all your future medical costs, the Medicare Set-Aside may be applicable to ensure your Medicare benefits are protected. Medicare Set-Asides or “MSAs” should be considered for any personal injury claim where money is being provided to pay for future medical costs. The government and parties to the settlement often pay special attention and include a Medicare Set-Aside when you are already on Medicare, or reasonably expected to be on Medicare soon because you have filed for Social Security disability insurance coverage.

Let's take a look at an example of how an MSA can be used in a settlement process to protect you in your Medicare benefits. For instance, if you suffer a spinal injury at work, you file a workers’ compensation claim, and you get a sign an insurance adjuster for your medical care. Your insurance carrier may offer you money to settle your case and all your ongoing spinal treatment. If you take money from the settlement in place of receiving ongoing care from the insurance company, you are taking your healthcare choices into your own hands, however, keep in mind the insurance company will no longer pay for your ongoing treatment. If a portion of the settlement money is to pay for future medical care, it's important to consider a Medicare Set-Aside, and to understand how it may impact you.

The MSA is an organized way to show the federal government that you do not try to make Medicare the primary payer for your injury. As a way to comply with the federal Medicare secondary payer statute during the settlement process, many choose to specifically put together a report showing the cost of items, that our treatments related to the injury, and it would be covered by Medicare. This report, and the settlement money allocation, is what is called the MSA.

How do you know if your MSA is enough? It is not required, but you can choose to voluntarily submit your MSA report to Medicare to be reviewed and approved. Medicare will approve the total amount or provide feedback. Medicare will only review reports over certain size thresholds. If it does not meet thresholds where you do not submit it, Medicare expects you made a reasonable estimate.

When you finally settle your case, the documents should mention your MSA and how you ensure Medicare will not become the primary payer. Once your case is settled, Medicare will expect to receive annual reports from you, showing how you use your settlement funds for the rest of your life. If you fail to submit your annual reports federal government, or are not reporting properly to them, then you run the risk of Medicare refusing to pay for your future medical treatments, or potentially paying, but then sending you a collection service. Making sure Medicare's interests are considered in your settlement is very important to ensure your Medicare benefits are protected. Once the MSA is established and your settlement is completed, Medicare highly recommends you use a Professional Administrator like Ametros to make sure your MSA reporting is done properly. To learn more about Professional Administration or if you have any questions about MSA's, contact us.