Medicare Set Aside FAQs

What is a Medicare Set Aside?
What is the law related to the Medicare Secondary Payer (MSP) Status?
What are Medicare Conditional Payments?
Who needs a Medicare Set Aside (MSA)?
What kinds of cases are MSAS required?
Is a MSA required in a liability case?
Once the MSA is approved, what happens to the money and how is it administered?
Do I need to give my health insurance claim number to process my Medicare Set Aside?
Does a Medicare beneficiary have a private cause of action against a primary payer for conditional Medicare payments?
Does Medicare consider comparative fault?

WHAT IS A MEDICARE SET ASIDE?: A Medicare Set Aside is a requirement by Medicare for a current or future Medicare recipient to "set aside" a portion of their settlement for future Medicare covered expenses. They only spend this money on Medicare covered expenses for the injury related care. Once exhausted, Medicare pays for the future injury related care and does not require the recipient to reimburse Medicare for expenses related to the settlement.
WHAT IS THE LAW RELATED TO THE MEDICARE SECONDARY PAYER (MSP) STATUS?: Title 42 United States Code, section 1395y(b)(2).
WHAT ARE MEDICARE CONDITIONAL PAYMENTS?: Medicare may make payments for beneficiaries without knowing that a Workers Compensation or Liability matter is pending. They require that the parties reimburse them for the payments they have "conditionally" made for the case.
WHO NEEDS A MEDICARE SET ASIDE (MSA)?: (1) If a Claimant is Medicare-eligible at the time of settlement, and the total settlement value is $25,000 or greater; or (2) If there is a "reasonable expectation" that the Claimant will be Medicare-eligible within thirty (30) months of settlement, and the total settlement value exceeds $250,000.
WHAT KINDS OF CASES ARE MSAS REQUIRED?: The Centers for Medicare and Medicaid Services (CMS) requires a MSA on cases involving Workers Compensation and Federal Employees' Compensation Act, the US Longshoremen's and Harbor Workers' Compensation Act and the Federal Coal Mine Health and Safety Act of 1969.
IS A MSA REQUIRED IN A LIABILITY CASE?: CMS enforces Title 42 United States Code, section 1395y(b)(2), and therefore it is recommended for you to consider Medicare's interests while settling Liability cases. CMS has required a MSA in settlements where Medicare / Social Security Disability eligibility are not in question and the dollar amount for future anticipated medical expenses is large. Please call us with any questions you may have for your Liability matters.
ONCE THE MSA IS APPROVED, WHAT HAPPENS TO THE MONEY AND HOW IS IT ADMINISTERED?: CMS requires that the funds for the MSA must be placed into an interest bearing account with distributions made only for medical expenses related to the injury. The individual or account administrator must provide annual accounting records for all disbursements to CMS. Once all funds have been exhausted, a final accounting audit is performed before the injured individual's Medicare benefits are fully reinstated with no future risk of termination.
DO I NEED TO GIVE MY HEALTH INSURANCE CLAIM NUMBER TO PROCESS MY MEDICARE SET ASIDE?: Yes, Medicare requires the Health Insurance Claim Number (HICN) as the number that is needed to process any reporting. (See, CMS Town Hall Teleconference, October 28, 2010.)
DOES A MEDICARE BENEFICIARY HAVE A PRIVATE CAUSE OF ACTION AGAINST A PRIMARY PAYER FOR CONDITIONAL MEDICARE PAYMENTS?: Yes, when settling a claim with a Medicare beneficiary they also have a private cause of action according to 42 USC § 1395y(b)(3)(A). This statute gives the beneficiary the right to file a lawsuit against the primary payer to recover conditional payments. If a primary payer doesn't pay a claim it is responsible for when Medicare has made conditional payments, then the primary payer is responsible for double the amount of benefits paid. A waiver of the private cause of action should be integrated into all releases when a claim is settled. (See, Section 42 USC § 1395y(b)(3)(A).)
DOES MEDICARE CONSIDER COMPARATIVE FAULT?: The Medicare Secondary Payer Manual indicates that "the only situation in which Medicare recognizes allocations of liability payments to non-medical losses when payment is based on a court order on the merits of the case. If the court or other adjudicator of the merits specifically designate amounts that are for payment of pain and suffering or other amounts not related to medical services, Medicare will accept the court's designation. Medicare does not recover from portions of court awards that are designated as payment for losses other than medical services." (Medicare Secondary Payer Manual, Chapter 7, Section 50.4.4: Designation in Settlements.) It is interesting to note that Medicare has recently removed this section from the internet only manual on 12/12/11 for their additional review. If a beneficiary has been determined to have comparative fault for a liability accident, Medicare has a waiver process which could potentially reduce the amount it is seeking in reimbursement. For more information about the entire Medicare Secondary Payer process and guidance, please click here.