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Protect Your Medicare Benefits with a Medicare Set-Aside

By James Cruz June 30, 2023 Health and Fitness

Medicare is an essential part of healthcare for many older individuals in the United States. When you’ve suffered an injury due to someone else’s negligence, it’s important to understand the financial implications that can arise. That’s where Medicare Set-Asides (MSA) come in. In this comprehensive guide, I’ll explain everything you need to know about MSAs and how they affect your injury settlement.

What Is a Medicare Set-Aside (MSA)?

A Medicare Set-Aside (MSA) is a portion of a settlement fund that is set aside to cover future medical expenses related to an injury. MSAs are required to be used for Medicare-covered items and services. They’re typically funded from a workers’ compensation or personal injury settlement when the recipient is a Medicare beneficiary.

It’s worth noting that it can also be used in liability cases like auto accidents or even malpractice suits, too.

These future medical expenses can also include home healthcare services, which are often crucial to beneficiaries’ ongoing recovery and care. You can learn more about home healthcare under Medicare here.

When Is a Medicare Set-Aside Needed?

MSAs are needed when a person has already enrolled in Medicare or is likely to enroll within 30 months. This only applies to individuals who have applied for Social Security Disability Insurance (SSDI) and are waiting or have End-Stage Renal Disease (ESRD) but haven’t started dialysis yet.

An MSA aims to ensure injured individuals can pay for their ongoing medical expenses while safeguarding Medicare’s financial stability. But when do we say a person is “likely to enroll” in Medicare?

When Are You “Likely to Enroll” in Medicare?

More often than not, this applies to individuals who, due to their disability status or age, can reasonably expect to become eligible for Medicare within a time frame of 30 months. Since an MSA aims to ensure individuals with active treatment can pay for their medical expenses, learning more about MSA requirements straight from the source itself would be wise.

Medicare Set-Aside Guidelines and Regulations

The laws and reporting requirements surrounding MSAs are constantly evolving. Healthcare providers and beneficiaries alike must stay up-to-date on Medicare compliance requirements to avoid the consequences of improper administration.

This is especially true since the Centers for Medicare & Medicaid Services (CMS) is pushing to expand MSAs’ regulations to include all personal injury cases to ensure that Medicare’s interests are always protected in all personal injury claims.

If beneficiaries and providers don’t stay on top of this, there is a high potential for issues like fines, penalties, and potential denial of Medicare coverage. So if you plan on self-administering your WCMSA, keep this in mind.

Funding Options for Medicare Set-Asides

Various funding methods, such as lump-sum payments or structured settlement annuities, can finance Medicare Set-Aside accounts. Structured settlements offer potential cost savings and tax-free interest and can help ensure beneficiaries do not run out of funds. They also offer the flexibility to make payments over time or on a schedule customized to meet injury-related expenses.

In general, the funding method varies based on the specifics of the settlement and the individual’s health status. For example, while a structured settlement is likely more appropriate for a younger individual with a long life expectancy, lump-sum payments may make more sense for older individuals.

Administration and Reporting

Proper MSA administration and reporting require vigilance and attention to detail. Beneficiaries and injury attorneys should keep accurate records and comply with CMS regulations regarding financial reporting and annual expenditure reports, though CMS review is voluntary.

Regardless, as aforementioned, improper reporting can lead to the denial of payment or subsequent recovery from beneficiaries or attorneys, so a CMS review can help to ensure compliance.

Medicare Set-Aside Approval Process

MSAs are voluntary, and the Centers for Medicare & Medicaid Services (CMS) reviews the proposed MSAs for appropriateness. CMS typically recommends review if the proposed settlement exceeds $25,000 and the beneficiary is Medicare-eligible or will become entitled to Medicare within 30 months post-injury.

Medicare Set-Aside Expenditures and Exhaustion

Once a beneficiary exhausts the MSAs funds, they must submit an expenditure report to propose that Medicare should take over coverage for follow-up injury treatments. The CMS may, however, conduct a final audit to ensure that all services were for injury-related medical purposes.

If audited, beneficiaries should make sure to have all documentation to ensure a clean audit.

I also want to note that you must submit annual accounting reports to CMS regardless of whether the funds are exhausted.

Tying Things Up

Medicare Set-Asides are often an essential part of personal injury claims, and understanding their significance assists in ensuring proper administration, compliance, and transparency on behalf of beneficiaries, healthcare providers, and attorneys.

Now that you better understand MSAs and how they work in injury settlements, I hope you can move forward with confidence, knowing that you’re better equipped to navigate this unique area of healthcare finance.

The information and resources provided should empower you to make an informed decision regarding this benefit. So don’t hesitate to reach out to your healthcare or Medicare provider today to learn more about your coverage and assistance options.

Let’s Have a Conversation:

How has your experience been with managing a Medicare Set-Aside account, if you have one? What are your thoughts on the current guidelines and regulations surrounding Medicare Set-Asides? Is expanding MSA regulations to all personal injury cases a good idea? Why or why not?

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The Author

James has served his local community for the past 5 years and has gained extensive insight into the American Healthcare System. With this knowledge, he decided to create a way of explaining healthcare so that anyone could understand it. He received his Bachelor's degree in Health Administration from Ohio University and has always had a passion for writing.

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