Medicare Set-Aside

Medicare Set-Aside (MSA) is a trust arrangement that separates funds earmarked for future medical care related to a catastrophic injury, as required by the Centers for Medicare & Medicaid Services (CMS) in qualifying workers’ compensation and personal injury settlements. Limitations are placed on how the money received is spent; a portion of the settlement in personal injury and worker compensation litigation cases must be reserved for medical services and reimbursement of health care expenses properly covered by Medicare or Medicaid. 

The money in the MSA is not subject to Medicare’s lifetime limit on spending for medical expenses. This means that you can use the money in the MSA to pay for any medical expenses, including those that Medicare does not cover, such as long-term care.

Medicare Set-Aside can also help you maintain your eligibility for Medicare and Medicaid. If you do not set aside money in an MSA, Medicare may consider the settlement money to be a resource and reduce your eligibility for benefits.

Among the keys to successful set-aside planning is to arrange for a reliable, capable person to serve as trustee and carry the ongoing responsibility of ensuring that the delineation of funds remains intact. In addition, we establish the specific limits on our clients’ money so that there are no surprises and they can plan confidently, while not going astray of the extensive Medicare guidelines that govern set-aside planning and ongoing trust management.

The Elder Law and Estate Planning team at ThompsonMcMullan provides assistance in these circumstances by ensuring that our clients have the opportunity to weigh the terms of a settlement while understanding how much money will be steered to the Medicare set-aside pot and how much will be accessible for their other needs.

What Is a Medicare Set-Aside?

A Medicare Set-Aside (MSA) is a financial arrangement required by the Centers for Medicare & Medicaid Services (CMS) in certain workers’ compensation and personal injury settlements. When Medicare has paid — or is expected to pay — for injury-related medical expenses, CMS in certain workers’ compensation and personal injury settlements. When Medicare has paid –or is expected to pay – for injury-related medical expenses, CMS requires that a portion of the settlement be ‘set aside’ in a dedicated account to recover those future medical costs before Medicare resumes payment.

MSAs must be structured to meet CMS requirements. Improperly handled set-asides can jeopardize Medicare benefits and expose parties to liability. ThompsonMcMullan helps personal injury and workers’ compensation attorneys establish and administer MSA accounts in full compliance with CMS guidelines.

What Triggers a Medicare Set-Aside?

CMS uses two threshold criteria to determine when an MSA review may be appropriate in a workers’ compensation settlement: (1) the claimant is currently a Medicare beneficiary and the settlement exceeds $25,000, or (2) the claimant has a reasonable expectation of Medicare enrollment within 30 months and the settlement exceeds $250,000. For personal injury cases, thresholds differ and CMS review is voluntary, though advisable in many cases.

Our Medicare Set-Aside Share Planning practice includes:

• Pre-settlement set-aside planning for future expenses
• Guidance for erecting and managing a firewall to adequately set aside expenses for medical care related to personal injury
• Establishing a trustee to oversee the set-aside trust and ensure expenses are properly disbursed
• Participating as co-counsel or as guardian ad litem in the negotiation and approval of settlements on behalf of minors or incapacitated individuals