With everything employers have on their plates, why should they care about Medicare Set-Asides, or MSAs? The main reason is: MSAs facilitate workers’ compensation settlements.

Closing claims reduces administrative burden, allows for a reduction in claim reserves and eliminates ongoing medical treatment and pharmacy costs.

The uncertainty of an injured employee’s future medical care combined with the expected continual increase in medical costs present quite a risk for a payer with an open claim.

The Centers for Medicare and Medicaid Services does not require inflation to be factored into an MSA. Its allocation is locked in at current medical rates at the time CMS approves it. Settling the claim with an MSA that is approved by CMS brings finality to claim closure.

The MSA is a financial agreement that reserves a portion of a settlement to cover future treatment and prescription costs of a work-related injury, illness or disease. MSAs were designed to protect Medicare from paying for post-settlement treatment of a workers’ compensation injury.