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Medicare Set-Asides

What is a Medicare Set-Aside?

By April 19, 2022April 21st, 2022No Comments
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A Medicare Set-Aside is the preferred method for protecting Medicare’s interests. A part of the settlement is “set aside” into an account which will then cover future medical costs related to the liability-related injury, illness, or disease. Medicare regulations state that Medicare will not pay for Medicare-covered medical expenses related to your injury until the Medicare Set-Aside (MSA) funds have been exhausted. Your MSA funds must be used to pay for all Medicare-covered medical services and supplies related to the liability injury. Once the lead contractor has confirmed that the MSA funds have been exhausted appropriately, Medicare will begin paying for Medicare-covered services related to the liability-related injury, illness, or disease; becoming the secondary payer.

Examples of some items that Medicare does not pay for are acupuncture, routine dental care, eyeglasses, or hearing aids. These items cannot be paid from the MSA account. You may obtain a copy of the booklet “Medicare & You” from your Social Security office or download it here [PDF] for a more extensive list of services not covered by Medicare.

Source: WCMSA Reference Guide [PDF].

Funding Your Medicare Set-Aside

Medicare will allow plaintiffs to fund a Medicare Set-Aside in one of two ways:

1. Lump-Sum Cash Payments
  • MSA Funds must be placed in an interest-bearing account, separate from your personal savings or checking account.
  • MSA funds may only be used to pay for medical services related to your liability-related injury that would normally be paid for by Medicare.
  • Funding with a Lump-Sum does not allow for any savings in the amount of funds allocated to future Medicare-covered, accident-related treatment.
2. Structured Settlement Annuities
  • The Annuity earns interest and is paid out via direct deposit to the plaintiff or an administration company on an annual basis.
  • Funding with a structured settlement annuity allows for the naming of a beneficiary, whereby, in the event of premature death, future payments are made directly to the beneficiary, and escape estate obligations.
  • Funding with a Structured Settlement annuity often can offer the plaintiff significant upfront cash savings when funding an MSA, when compared to the Lump-Sum cash method.

Medicare Set-Aside Administration and Record Keeping

Medicare allows for MSA accounts to be self-administered or professionally administered. Due to the amount of record-keeping, attestations, submissions to Medicare, and other administrative protocols that must be adhered to with your MSA account, Precision always recommends that you seek professional administration for your MSA account.

The professional administrator establishes a dedicated bank account for the individual’s medical funds from the settlement. Then, most administrators provide the claimant with a unique card that works just like a health insurance card. When the claimant shows the card at their pharmacy or doctor, the administrator receives the bill, applies group purchasing discounts, and then pays the bill automatically. The injured individual never touches the bill but receives a record of every transaction, the savings, and their account balance information.

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