If you’re settling your workers’ compensation case and are on Medicare—or will be soon—you may need a Medicare Set-Aside (MSA). It’s not optional. It’s the law.
Failing to properly allocate future medical funds can jeopardize your Medicare benefits. At Employees First Labor Law (EFLL), we help injured workers understand how MSAs work and how to protect both their settlement and their future care.
1. What Is a Medicare Set-Aside (MSA)?
A Medicare Set-Aside Arrangement is a portion of your workers’ comp settlement that is set aside exclusively to pay for future medical treatment related to your work injury—so that Medicare doesn’t get stuck with the bill.
It ensures Medicare remains the secondary payer and is required under the Medicare Secondary Payer Act (42 U.S.C. § 1395y(b)).
📌 Think of it as a legally mandated savings account for future care—before Medicare steps in.
2. When Is an MSA Required?
The Centers for Medicare & Medicaid Services (CMS) requires an MSA in workers’ comp settlements if either of the following applies:
| Criteria | Description |
|---|---|
| You are a current Medicare beneficiary | AND your total settlement exceeds $25,000 |
| You are not yet on Medicare, but likely to enroll within 30 months | AND the total settlement exceeds $250,000 |
🔎 Example: You’re 63 and receive SSDI. You’re settling for $85,000. An MSA is almost certainly required.
3. What Does an MSA Cover?
Your MSA must fund only injury-related care that Medicare would normally cover, including:
- Doctor visits
- Hospitalizations
- Surgeries
- Prescription medications
- Durable medical equipment
- Therapy and diagnostic testing
It does not cover:
- Pain and suffering
- Non-Medicare services (e.g., acupuncture)
- Future earnings or vocational rehab
4. How Is the MSA Amount Calculated?
Usually, an MSA vendor or professional administrator evaluates:
- Your treating physician’s future care recommendations
- Current medical records
- Prescription history
- Medicare coverage guidelines
- Fee schedules and utilization patterns
They produce a detailed allocation report, which may be submitted to CMS for review (though not always required).
5. Do I Need to Submit the MSA to CMS?
CMS voluntary submission is common in larger settlements. While not legally mandatory, non-submission is risky—because Medicare can deny future bills if the MSA isn’t approved or adequately funded.
EFLL evaluates on a case-by-case basis whether CMS approval is in your best interest.
6. How Is the MSA Funded and Managed?
You can fund the MSA in two ways:
| Method | Pros | Cons |
|---|---|---|
| Lump Sum | Simpler and often required | Full amount upfront |
| Structured Settlement (Annuity) | Spreads cost over years | Requires annual reports |
Then, you must manage the MSA account carefully:
- Only use MSA funds for approved expenses
- Keep itemized receipts
- Submit annual reports to CMS
- Stop billing Medicare until MSA is exhausted
🛑 Failure to comply can result in loss of Medicare coverage for related treatments.
7. What Happens If I Don’t Use an MSA?
If you skip the MSA or misuse funds:
- Medicare may refuse to cover treatment
- You may owe money back
- You risk violating federal law
- The entire settlement could be jeopardized
That’s why every serious C&R settlement should be reviewed for MSA implications.
8. How EFLL Helps with MSAs
At EFLL, we help protect both your benefits and your bottom line by:
- Determining if an MSA is required
- Connecting you with certified MSA vendors
- Ensuring proper future care estimates
- Submitting for CMS approval when advisable
- Negotiating settlement structures that protect your interests
- Coordinating with Social Security Disability Insurance (SSDI) and Medicare enrollment
9. Talk to EFLL Before You Settle
Don’t let a technicality cost you your Medicare eligibility—or your peace of mind. If your workers’ compensation case involves ongoing medical treatment and you’re either already on Medicare or will be eligible soon, a poorly structured settlement can leave you unprotected, underfunded, or even in violation of federal law.
Why It Matters:
- Medicare is a secondary payer. If your case isn’t settled correctly, Medicare may refuse to pay for your injury-related care until all other primary sources (like your settlement) have been exhausted properly.
- If you don’t allocate funds for future care—or use them incorrectly—Medicare can deny coverage, demand reimbursement, or even pursue legal action.
- Insurance companies don’t protect you from these consequences. They’re only focused on closing the claim—often as cheaply as possible.
How EFLL Protects You:
- We work with certified MSA vendors and experts to ensure proper evaluation of your future medical needs.
- We help you decide whether lump sum or structured settlement funding is best for your situation and benefits eligibility.
- We ensure compliance with CMS guidelines, protecting your Medicare access and shielding you from financial risk.
- We review and revise all settlement language to ensure that your rights, responsibilities, and benefits are clear—and enforceable.
🧠 Settling your case without properly handling the MSA is like buying a house without checking if it has plumbing—it might look fine on the surface, but it will fall apart when you need it most.
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