Reveal Law

Navigating Medicare Set-Asides: Everything You Need to Know

Introduction to Medicare Set-Asides

Medicare Set-Asides (MSAs) are an important consideration for individuals who have or will have both a workers’ compensation settlement and Medicare coverage. In essence, MSAs are funds set aside to cover future medical expenses related to a workers’ compensation settlement.

This article will provide a comprehensive introduction

to Medicare Set-Asides, exploring the different types, their definition and purpose, as well as the eligibility for WCMSA. 1.

Types of Medicare Set-Asides

1.1 Lump Sum Payment: One type of MSA is the lump sum payment. In this case, a fixed amount of money is set aside to cover all future medical expenses related to the workers’ compensation settlement.

The injured individual receives the lump sum upfront and is responsible for managing the funds and ensuring they are used appropriately. 1.2 Structured Payment: Another type of MSA is the structured payment.

In this case, rather than receiving a lump sum, the injured individual receives periodic payments over a specified period of time. These payments are pre-determined and are meant to cover future medical expenses associated with the workers’ compensation settlement.

Structured payments provide a more controlled and structured approach to managing funds. 2.

Definition and Purpose of WCMSA

A Workers’ Compensation Medicare Set-Aside (WCMSA) is a specific type of MSA that applies to individuals who have both a workers’ compensation settlement and are eligible for Medicare. The purpose of a WCMSA is to protect the interests of Medicare by ensuring that funds are set aside to cover future medical expenses, reducing the burden on the Medicare system.

A WCMSA is created based on the projected costs of future medical treatment related to the work-related injury or illness. The intent is to allocate a portion of the workers’ compensation settlement to pay for these future medical expenses rather than relying solely on Medicare coverage.

3. Eligibility for WCMSA

3.1 Qualification criteria for WCMSA: In order to qualify for a WCMSA, certain criteria must be met.

First and foremost, the individual must be eligible for Medicare. Secondly, there must be a workers’ compensation settlement in place or imminent.

The total settlement amount must also meet or exceed a certain threshold determined by Medicare. Finally, the individual must be entitled to Medicare within 30 months of the settlement date.

3.2 Age and disability considerations: Age and disability can also play a role in WCMSA eligibility. In certain cases, injured workers who are at least 62 and a half years old and receiving social security disability benefits may be eligible for a WCMSA regardless of the settlement amount.

These individuals have the option to use the WCMSA allocation to cover both their future medical expenses and their Medicare premiums.


In conclusion, understanding Medicare Set-Asides, specifically Workers’ Compensation Medicare Set-Asides, is crucial for individuals who have or will have both a workers’ compensation settlement and Medicare coverage. The different types of MSAs, such as lump sum payments and structured payments, provide options for managing future medical expenses.

WCMSAs are designed to protect the interests of Medicare and ensure that funds are set aside to cover these expenses. Eligibility for WCMSAs is determined based on Medicare eligibility, the existence of a workers’ compensation settlement, and the total settlement amount.

Age and disability may also be qualifying factors. By understanding these concepts, individuals can navigate the complex world of MSAs and ensure their future medical needs are met.

3) Obligations with WCMSA

3.1 Rules and regulations for WCMSA participants

If you are participating in a Workers’ Compensation Medicare Set-Aside (WCMSA), there are certain rules and regulations that you must adhere to in order to remain compliant. These obligations are in place to ensure that the WCMSA funds are used appropriately to cover future medical expenses related to your workers’ compensation settlement.

Here are some important factors to keep in mind:

Receipts for medical expenses: It is essential to keep detailed receipts for all medical expenses paid for using the WCMSA funds. These receipts serve as proof of payment and are necessary for future reporting requirements.

Reporting yearly expenses: WCMSA participants are required to report their yearly medical expenses to Medicare. This reporting is typically done through the Medicare Coordination of Benefits Contractor (COBC).

By documenting and reporting your expenses, Medicare can track the appropriate utilization of the WCMSA funds. Approved treatments and medications: WCMSA funds can only be used for treatments and medications that are deemed reasonable and necessary for the work-related injury or illness.

It is crucial to ensure that the treatments and medications you receive are approved by Medicare. Consulting with your healthcare provider and obtaining pre-approval before starting any treatment is highly recommended.

Pre-approved Medicare rate: When accessing medical services or treatments, WCMSA participants must utilize the pre-approved Medicare rate for billing purposes. This means that the provider can only charge up to the amount approved by Medicare for the specific service or treatment.

It is important to inform your healthcare providers and pharmacies that you are utilizing WCMSA funds to avoid any potential billing discrepancies. 3.2 Consequences of non-compliance

Failure to comply with the rules and regulations of WCMSA can have serious consequences for participants.

The following are some potential issues that may arise due to non-compliance:

Unqualified expenses: If WCMSA funds are used for expenses that are not related to the work-related injury or illness, it can be considered non-compliant. Medicare may require repayment for any funds improperly spent or deny future claims until the misused funds are replenished.

Overpriced treatments and medications: It is crucial to ensure that the charges for treatments and medications are reasonable and within the pre-approved Medicare rate. If WCMSA funds are used to pay for overpriced services, it may be considered non-compliant, and Medicare may deny reimbursement.

Paying Medicare out-of-pocket: Non-compliance with WCMSA rules and regulations can result in Medicare denying future claims and requiring participants to pay for their medical expenses out-of-pocket. This can put a significant financial burden on individuals who were relying on the WCMSA funds to cover their future medical needs.

4) Accessing WCMSA Funds

4.1 Keeping funds in an interest-bearing account

One option for managing your WCMSA funds is to keep them in an interest-bearing account. An interest-bearing account is a savings account that accrues interest over time.

By keeping your funds in this type of account, you can earn a small amount of interest on the balance, which can help offset any inflationary effects on the funds. It is important to select an FDIC-insured bank or financial institution to ensure the safety of your funds.

By choosing an institution with a competitive interest rate, you can maximize the growth of your WCMSA funds over time. 4.2 Withdrawal options for qualified medical services and treatments

When you need to access your WCMSA funds for qualified medical services and treatments, there are several withdrawal options available:

Debit card: Some WCMSA administrators offer a debit card specifically for accessing the funds.

With this option, you can use the debit card to pay for medical expenses directly, ensuring easy and convenient access to the funds when needed. Lump sum: In certain cases, you may choose to withdraw a lump sum from your WCMSA funds to cover a specific medical expense.

However, it is important to carefully consider the long-term implications of withdrawing a lump sum. If the entire WCMSA amount is withdrawn, you will no longer have funds available for future medical expenses, which may leave you financially unprepared.

Structured settlement: Another option is to receive periodic payments from your WCMSA funds, similar to the structured payment type discussed earlier. This can provide a steady stream of funds to cover ongoing medical expenses, ensuring that the funds are properly managed and not depleted too quickly.

It is important to work closely with your WCMSA administrator to determine the best withdrawal options for your specific needs. They can provide guidance on the most appropriate method to access your funds while ensuring compliance with WCMSA regulations.

In conclusion, understanding and fulfilling obligations with a Workers’ Compensation Medicare Set-Aside (WCMSA) is crucial for individuals who have or will have both a workers’ compensation settlement and Medicare coverage. Adhering to the rules and regulations, such as providing receipts for medical expenses, reporting yearly expenses, and using approved treatments and medications, is essential to remain compliant.

Non-compliance can have serious consequences, including repayment requirements and denial of future claims. Accessing WCMSA funds can be done through keeping them in an interest-bearing account and withdrawing through options such as a debit card, lump sum, or structured settlement.

By understanding these obligations and access options, individuals can ensure the proper use and management of their WCMSA funds for their future medical needs.

5) Coverage of WCMSA Funds

5.1 List of qualified medical expenses

When it comes to accessing WCMSA funds, it is important to understand the types of expenses that are considered qualified and eligible for coverage. The following is a list of common medical expenses that are typically covered by WCMSA funds:

– Doctor’s office visits: These include consultations with primary care physicians, specialists, and other healthcare providers.

– Hospital stays: If you require inpatient care due to your work-related injury or illness, the costs associated with hospital stays can be covered. – Operations: Surgical procedures necessary for the treatment of your work-related injury or illness are typically covered.

– Home health care: If you need home health services such as nursing care or therapy, these expenses can be paid for using WCMSA funds. – Physical therapy: Rehabilitation services, including physical therapy, occupational therapy, and speech therapy, are eligible expenses.

– Radiology: Diagnostic imaging tests, such as X-rays, CT scans, and MRIs, are usually covered by WCMSA funds. – Blood tests: The costs of necessary laboratory tests, such as blood work and urinalysis, can be paid for using WCMSA funds.

– Prescription medications: Medications prescribed to treat your work-related injury or illness can be covered. It is important to ensure that these medications are in line with the approved treatments and medications guidelines set by Medicare.

– Medical equipment: The costs associated with durable medical equipment (DME) or assistive devices, such as wheelchairs, crutches, or prosthetics, can be covered by WCMSA funds. It is important to note that this list is not exhaustive, and there may be additional qualified medical expenses specific to your unique situation.

Consulting with your healthcare providers and WCMSA administrator can help ensure that you understand which expenses are eligible for coverage. 5.2 Work-related injury focus

The focus of WCMSA funds is to cover medical expenses directly related to your work-related injury or illness.

The primary purpose of WCMSA funds is to provide coverage for services and treatments that are necessary for the management and improvement of your work-related condition. It is essential to understand that WCMSA funds are meant to be the primary insurance for your work-related injury, while Medicare serves as the secondary insurer.

This means that the WCMSA funds should be exhausted before relying on Medicare coverage for related medical expenses. By utilizing WCMSA funds as the primary insurer for work-related injuries, there is a significant benefit for both the individual and the primary insurer.

The individual can access the necessary medical care and treatments without any delay or denial of coverage. The primary insurer can fulfill its obligations without the burden of responsibility for ongoing medical treatment.

6) CMS Review of WCMSA

6.1 Lack of legal requirement for CMS review

When it comes to the approval of WCMSA allocations, it is important to note that there is no legal requirement for direct CMS review and approval. However, it is highly recommended that WCMSA allocations be submitted to the Centers for Medicare and Medicaid Services (CMS) for review.

While CMS review is not mandatory, it provides several advantages. A CMS-approved WCMSA provides assurance to all parties involved that the funds have been appropriately allocated and will be used for their intended purpose.

This can minimize the risk of potential disputes or challenges in the future. Moreover, CMS review can help ensure compliance with Medicare’s guidelines and regulations, reducing the chances of non-compliance consequences.

6.2 Recommendation for submitting WCMSA to CMS

Submitting a WCMSA to CMS for review can be done through the official CMS Workers’ Compensation Medicare Set-Aside Portal (WCMSAP). This online portal allows users to create a case and upload all relevant documents for review.

Before submitting a WCMSA to CMS, it is important to gather all necessary information and documentation. This typically includes a detailed treatment plan outlining the anticipated medical care and expenses, as well as medical records, current medical bills, and settlement-related documents.

When submitting a WCMSA for review, it is important to ensure that the documentation accurately reflects the individual’s future healthcare needs related to the work-related injury or illness. Providing comprehensive and detailed information will facilitate a thorough review by CMS.

It is essential to keep in mind that CMS review can take time, and it is recommended to allow for sufficient processing and response time. Once the WCMSA review is complete, CMS will issue a letter indicating its approval, if applicable.

This letter can serve as official documentation of the approved WCMSA allocation. In conclusion, understanding the coverage of WCMSA funds is crucial for individuals who have or will have both a workers’ compensation settlement and Medicare coverage.

Qualified medical expenses encompass a range of treatments, services, and medications directly related to the work-related injury or illness. WCMSA funds serve as the primary insurance for work-related injuries, while Medicare acts as the secondary insurer.

Although CMS review of WCMSA is not legally required, it is highly recommended to benefit from the advantages of a CMS-approved allocation. The submission process can be done online through the WCMSAP, ensuring accurate documentation and facilitating a thorough review.

By understanding these aspects, individuals can effectively navigate the coverage and review processes of WCMSA and ensure the appropriate use of funds for their future medical needs.

7) Purpose of WCMSAs

7.1 Preventing excess payment by Medicare

One of the primary purposes of Workers’ Compensation Medicare Set-Asides (WCMSAs) is to prevent excessive payment by Medicare. When individuals have both a workers’ compensation settlement and Medicare coverage, it is important to ensure that the funds from the settlement are appropriately allocated to cover future medical expenses related to the work-related injury or illness.

WCMSAs serve as the primary insurance for the work-related injury or illness, while Medicare functions as the secondary insurer. By having WCMSA funds in place, the responsibility for payment of related medical expenses shifts from Medicare to the primary insurer.

This allocation of funds helps prevent Medicare from paying for medical treatment that should be covered by the workers’ compensation settlement. It ensures that the burden of payment is placed on the appropriate entity and helps reduce the financial strain on the Medicare system as a whole.

Without WCMSAs, individuals with both a workers’ compensation settlement and Medicare coverage may be tempted to solely rely on Medicare for their medical expenses, potentially resulting in Medicare paying for treatments that should be covered by the primary insurer. WCMSAs help prevent this by establishing a dedicated pool of funds specifically for covering future medical expenses, avoiding any overutilization of Medicare resources.

By allocating WCMSA funds, the financial responsibility is appropriately balanced, ensuring that Medicare functions as the secondary insurer while still providing necessary coverage for unrelated medical conditions or services not covered under the WCMSA. In cases where WCMSAs are not in place, Medicare may initially cover the medical expenses related to the work-related injury or illness.

However, Medicare has the right to seek reimbursement once the funds from the workers’ compensation settlement become available. By implementing WCMSAs, potential disputes between Medicare and the primary insurer can be minimized.

The funds are set aside and accounted for, giving both Medicare and the primary insurer clear visibility into the financial obligations and ensuring the appropriate utilization of resources. In addition to preventing excess payment by Medicare, WCMSAs have the advantage of providing a more streamlined and efficient process for individuals with both a workers’ compensation settlement and Medicare coverage.

WCMSAs eliminate the need for constant coordination of benefits between the primary insurer and Medicare, reducing the administrative burden and the potential for delays or denials of coverage. Overall, the purpose of WCMSAs is to establish a transparent and equitable system for allocating funds to cover future medical expenses related to work-related injuries or illnesses.

By ensuring that the primary insurer, rather than Medicare, assumes the financial responsibility for these expenses, WCMSAs help prevent excess payment by Medicare, preserve the integrity of the workers’ compensation system, and ensure the appropriate allocation of resources for the benefit of all parties involved.

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