Medicare: Don’t You (Forget About Me) in Workers’ Compensation Settlements

Managing Member Alan G. Brackett and Associate Ava M. Wolf are co-authors of an “Attorney Analysis” workers’ compensation column for Reuters Legal News and Westlaw Today. Their recent article, “Medicare: Don’t You (Forget About Me) in Workers’ Compensation Settlements,” was published on April 24, 2024.

Medicare: Don’t You (Forget About Me) in Workers’ Compensation Settlements

In the 1985 classic “The Breakfast Club,” the song “Don’t You (Forget About Me)” was inspired by Ally Sheedy’s character Allison Reynolds, the introvert. In workers’ compensation, the thing you can’t forget is Medicare. Settlements must ensure the responsibility of the injured workers’ medical care is not shifted to the Medicare program when it properly rests with the employer and its carrier. (Simple Minds, a Scottish rock band, recorded the No. 1 hit “Don’t You (Forget About Me),” written by Keith Forsey and Steve Schiff.).

Who’s entitled to Medicare?

According to the Centers for Medicare & Medicaid Services (“CMS”), an individual is eligible for Medicare when they are: (1) 65 years of age or older; (2) under the age of 65 and receiving disability benefits from Social Security or the Railroad Retirement Board; or (3) suffering from End Stage Renal Disease. (See CMS.gov). CMS has also pronounced that in workers’ compensation claims, an injured worker is considered Medicare eligible when they have a reasonable expectation of Medicare enrollment within 30 months of their settlement. Id.

How does eligibility affect the workers’ compensation settlement?

By statute, Medicare’s interests must be considered in every workers’ compensation settlement, so prior to settling a workers’ compensation claim, the parties should consider whether the injured worker may be considered Medicare eligible. If the injured worker falls into one of the categories above – and the anticipated settlement is expected to be greater than $25,000.00 – a Medicare Set-Aside Arrangement (“MSA”) is advised. An MSA, as stated on the CMS.gov site, “is a financial agreement that allocates a portion of a workers’ compensation settlement to pay for future medical services related to the workers’ compensation injury, illness, or disease.” Medicare will not pay for future injury-related medical care until the funds are depleted. Id. There is a common misconception that MSAs are mandated by statute. That isn’t the case at all, but securing an MSA approved by CMS is a protection for all the parties to demonstrate that Medicare’s interests were properly considered and to prevent a future denial of care to an injured worker, or a claim by Medicare against an employer and carrier for not taking Medicare’s interests properly into consideration as the law requires.

While an MSA is a financial agreement, it is not drafted by attorneys involved with the workers’ compensation claim. Rather, a company that specializes in MSAs is retained and the parties assist by providing all necessary claim-supporting documents, including the injured workers’ medical records. The completed MSA will advise what care is covered by Medicare, along with the projected cost of such care. It will also estimate the costs of non-Medicare-covered medical care. In some workers’ compensation claims, an MSA can be “zeroed out.” This occurs when either (1) the workers’ compensation claim was completely denied or controverted and the employer and carrier made no payments except for claim expenses; or (2) the injured worker will not require future medical treatment. Receiving a $0.00 MSA is atypical and not easy to obtain, but it is possible.

The parties must ensure the injured worker is adequately compensated for Medicare-covered medical care. The parties typically agree to allocate the amount identified in the MSA as future medical benefits. It is also advisable for the parties to allocate funds for future, non-Medicare-covered medical care if any is indicated. In addition, while there are no statutory or regulatory requirements, the parties should submit the MSA to CMS for approval. Should the parties decide to submit a MSA to CMS for approval, they can do so electronically at: https://www.cob.cms.hhs.gov/WCMSA/.

For non-Medicare-eligible injured workers…

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