Medicare Set-Asides: Fundamentals On Protecting Medicare’s Interest

Medicare’s federal funds assist in covering a wide range of healthcare costs for adults age 65 and older, as well as for younger persons with specific needs and applicable benefits.

The Medicare Secondary Payer (MSP) Act directs the Centers for Medicare and Medicaid Services (CMS) with protecting Medicare’s future interest in cases involving Medicare beneficiaries or potential beneficiaries.

When a person receives settlement money for a workers’ compensation claim, a portion of that money is put into a Workers’ Compensation Medicare Set-aside Arrangement (WCMSA), or a Medicare Set-Aside (MSA), to pay for their future medical treatment.

Under the MSP Act, Medicare does not have the primary responsibility to cover medical costs, providing that another insurance carrier is responsible for the coverage before Medicare; thus, making Medicare the secondary responsible payer.

CMS has identified MSAs as a method for allocating money to pay for future treatment. Settlement recipients must exhaust the MSA funds in their entirety before Medicare will cover costs for treatment related to the injury reported in the claim. The amount allocated within an MSA depends on several considerations.