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Medicare Set Aside (MSA) Rules – In Nutshell

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Medicare Set Aside (MSA) Rules

Medicare Set Aside (MSA) rules confuse many people.

Recently, I posted on Medicare Set Asides (MSA or WCMSA). I received quite a few questions on how to quickly tell if MSA’s are necessary or not or Workers Comp files. I have seen flowcharts online that are not correct – one even by an MSA provider. The following is a quick synopsis.

Picture Of Physician With Computerize Globe On Hand (MSA) Rules Concept
(c) 123rf.com

In settlements where the future medical is going to be closed as part of the settlement the following must be considered:

CLASS I BENEFICIARY

Claimant is considered a Class I Medicare beneficiary if:

a) Claimant is 65 years or older;

b) Claimant has been on SSDI for 24 months or longer; or

c) Claimant has End Stage Renal Disease (ESRD)

As such, regardless of settlement value and including “compromise” settlements, you must consider Medicare’s interests. Medicare will need to review all Class I beneficiary settlements valued at $25,000 or greater. Class I beneficiary settlements below $25,000 in value do not require submission to and approval from Medicare. You are still required to consider Medicare’s interests and include future Medicare related medical costs in an allocation within the settlement.

 

CLASS II BENEFICIARY with Settlement values greater than $250,000

Picture Of Father And Son (MSA) Rules Walking On Beach
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Medicare approval is needed when settlement value is $250,000 or higher AND where an individual has a “reasonable expectation” of Medicare enrollment within 30 months. Situations that constitute “reasonable expectation” include but are not limited to:

a) Claimant is on SSDI but not yet Medicare eligible;

b) Claimant has applied for Social Security Disability Benefits;

c) Claimant has been denied Social Security Disability Benefits but anticipates appealing that decision or is in the process of appealing and/or re-filing;

e) Claimant is 62 years and 6 months old (i.e., may be eligible for Medicare based upon his/her age within 30 months);

f) Claimant has an End Stage Renal Disease (ESRD) condition but does not yet qualify for Medicare based upon ESRD.

Note: The Social Security Administration may use the following indicators when approving a claimant for SSDI benefits: Claimant has been deemed permanently and totally disabled; or Provider states that claimant cannot return to any reasonable gainful employment for a period of 12 months or longer.

CLASS II BENEFICIARY with Settlement value less than $250,000

Beneficiary (MSA) Rules couple
Wikimedia Commons – SuSanA Secretariat

Although Medicare approval is not needed for settlement value of under $250,000, when an individual does not have a “reasonable expectation” of Medicare enrollment within 30 months most insurers, self insurer, third party adjusters, and attorneys require a Medicare Allocation be completed for all cases greater than $25,000 to be certain Medicare’s interests are considered for future medical associated with a Liability or Workers Compensation settlement.

An appropriate portion of the total settlement needs to be identified as the Medicare Allocation. Additional services such as Structured Settlement, Custodial Medical and Indemnity Accounting, and Special Needs Trusts should be considered for complete administration, and to assure the client that the case will remain closed and appropriately managed according to the terms of settlement.

CLASS II BENEFICIARY with Settlement value less than $250,000

Although Medicare approval is not needed for settlement value of under $250,000, when an individual does not have a “reasonable expectation” of Medicare enrollment within 30 months most insurers, self insurer, third party adjusters, and attorneys require a Medicare Allocation be completed for all cases greater than $25,000 to be certain Medicare’s interests are considered for future medical associated with a Liability or Workers Compensation settlement.

An appropriate portion of the total settlement needs to be identified as the Medicare Allocation. Additional services such as Structured Settlement, Custodial Medical and Indemnity Accounting, and Special Needs Trusts should be considered for complete administration, and to assure the client that the case will remain closed and appropriately managed according to the terms of settlement.

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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