Remember we have said that one of the very important components that is part and parcel of any potential settlement that you may enter into with the insurance company involves the future cost of medical care, and I mentioned that we must break that down as between items that would be covered by Medicare, and items that would not be covered by Medicare.
As to those items that would he covered by Medicare, in many cases, something known as a Medicare Set-Aside (MSA) is going to be required.
For a very detailed discussion of all aspects of settlements of North Carolina Workers Comp Claims, we invite you to download our free book, The North Carolina Workers Compensation Guide to Settlements, by Joe Miller.
The Medicare Set-Aside
What is the basic idea behind a Medicare set-aside? It is best to think about it this way. You are not allowed to settle your workers compensation case, take a lump sum of money for your future care, and then start showing your Medicare card at your doctor’s office and expect to be covered by Medicare when you want to go for treatment for your accident-related injuries. That would be considered a double recovery, and Medicare is going to deny you coverage for that. You are required to take into account Medicare’s “future interests.”
And this is where it gets a bit confusing. How can you possibly take into account Medicare’s “future interests?” How can we possibly know what type of care you may need for the rest of your life that is related to your work injuries?
The truth is, no one can really know for sure; however, those with the appropriate knowledge and expertise can make a reasonable estimate of your future care, based on your doctors opinions, and past medical care that is related to your injuries.
So, in order to gauge what those future of medical requirements may be, in many cases, the insurance companies and their defense attorneys will order something called a Medicare Set-Aside (MSA) Report. In that report, a medical expert will go through your medical records with a fine- toothed comb and give a very detailed estimate as to your future yearly costs for everything from prescriptions to doctor’s appointments, to surgeries, injections or other medical procedures for your work- related injuries. The report will also include a lump sum estimate for the entire amount of Medicare- covered expenses that are likely to occur for the remainder of your life involving your work-related injuries.
Typically, as part of the settlement of your claim, the employer will agree to “fund” that lump sum set forth in the MSA report, either through an annuity, or through a direct payment to you, depending on how big of a number we are talking about. If there is a settlement, that amount is then required to be “set aside” (hence the name, Medicare “set-aside”) in a separate account. As you receive medical care for your injuries, you must use this separate account exclusively for your injury- related medical expenses, so that eventually, after many years, the entire amount in the account is “spent down” by you for any and all care that Medicare would cover. Either you or the administrator of the set-aside account must keep a copy of any and all receipts, and make a yearly accounting to the Federal Medicare office (CMS, or Centers for Medicare and Medicaid Services) for any and all amounts of your injury related medical costs.
When is this MSA report required? Under current guidelines, under a workers compensation settlement, it is required when the following three criteria are met:
1. The claimant is either currently enrolled in Medicare, or possesses a “reasonable expectation” of Medicare enrollment within 30 months of settlement;
2. the workers compensation settlement currently closes future medical expenses, effectively shifting the burden of future injury-related care from the workers compensation carrier to Medicare permanently;
3. the claimant, in fact, requires future injury-related care that would otherwise be covered by Medicare.
After the MSA Report
After the settlement, depending on the amount of the settlement, and whether you are a current Medicare beneficiary, the entire set-aside report is sent to CMS for their approval.
The current guidelines for submission of the report to Medicare for review are as follows:
1. If you are a current Medicare beneficiary, the report is only submitted if the gross settlement amount is greater than $25,000;
2. If you are not a Medicare beneficiary, but you do have a “reasonable expectation” of Medicare status within 30 months of settlement, then the gross settlement must be greater than $250,000 in order to require submission of the report to Medicare.
Even if your case does not fit into one of these categories that require submission, that does not mean that you should not have an MSA report done. It just means that Medicare does not have to review the report in order to have it be considered that you took Medicare’s “future interests” into account.
Once it gets to the CMS office, someone at CMS will review the MSA report and your medical records. If they do not find any major discrepancies, they will typically approve the Medicare set-aside. This process usually takes several months, usually in the neighborhood of four months.
What does it mean if Medicare approves the set-aside? That means that once you have fully “spent down” the amounts “set-aside” in your Medicare account, (which will likely take many years, if it ever occurs), and properly documented those amounts, you will then be able to have your work injuries covered by Medicare.
If, on the other hand, the Medicare office does not approve the Medicare set-aside estimate, then, depending on Medicare’s opinion, and what you have agreed on with the insurance carrier in advance, you may have to either return to the negotiation table, or, they may have agreed to pay Medicare’s figure. Oftentimes, if CMS does not approve the report, they will give their own opinion and give an alternate figure which they feel represents the true future value of your injury- related care which needs to be set aside. Oftentimes, the insurance companies will agree in advance to pay the additional amount, if it is a manageable amount higher than what was previously predicted.
Joseph A. Miller, Esq. has been representing injured workers throughout the Southeast for over 25 years. He is admitted to practice in North Carolina and Virginia. Please call us toll free at 888-694-1671, or contact us online for more information, or to receive a free initial evaluation of your claim.