Workers’ Compensation Medicare Set Aside Arrangements

A Workers’ Compensation Medicare Set-Aside (WCMSA) allocates a portion of the Workers’ Compensation (WC) settlement for all future work-injury-related medical expenses that are covered and otherwise reimbursable by Medicare.

The goal of establishing a WCMSA is to estimate, as accurately as possible, the total cost that will be incurred for all medical expenses otherwise reimbursable by Medicare for work-related conditions during the course of the beneficiary’s life, and to set aside sufficient funds from the settlement, judgment, or award to cover that cost. WCMSAs may be funded by a lump sum or may be structured, with a fixed amount of funds paid each year for a fixed number of years, often using an annuity.

Information for Attorneys regarding WCMSAs

While there are no statutory or regulatory provisions requiring that a WCMSA proposal be submitted to CMS for review, submission of a WCMSA proposal is a recommended process.  CMS will review a proposed WCMSA amount when the following workload review thresholds are met:

• The claimant is a Medicare beneficiary and the total settlement amount is greater than $25,000.00; or
• The claimant has a reasonable expectation of Medicare enrollment within 30 months of the settlement date and the anticipated total settlement amount for future medical expenses and disability or lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.00.

A claimant has a reasonable expectation of Medicare enrollment within 30 months if any of the following apply:

• The claimant has applied for Social Security Disability Benefits
• The claimant has been denied Social Security Disability Benefits but anticipates appealing that decision
• The claimant is in the process of appealing a denial of or re-filing for Social Security Disability benefits
• The claimant is 62 years and 6 months old
• The claimant has an End Stage Renal Disease (ESRD) condition but does not yet qualify for Medicare based upon ESRD

If a threshold is met, a WCMSA can be submitted to CMS for approval.
These thresholds are created based on CMS’ workload, and are not intended to indicate that parties may settle below the threshold with impunity. All parties in a workers’ compensation case have significant responsibilities under the Medicare Secondary Payer (MSP) laws to protect Medicare’s interests when resolving cases that include future medical expenses.  
Attorneys should regularly monitor the CMS website at http://go.cms.gov/wcmsa
for changes to these thresholds and for other changes in policies and procedures.

Additional information for employees, employers, adjusters, attorneys, insurers/self-insureds, and WCMSA vendors can be found in the WCMSA Reference Guide on the CMS website.