Your unused Medicare Set-Aside funds are never lost

Injuries can be a real pain, both physically and financially. But timely compensation can help cover your medical expenses and lessen the hit to your wallet.

If you sustained an injury while at work and now qualify for Medicare, there are different rules and regulations to get medical coverage. Your medical expenses could include anything from doctor visits, follow-ups and tests to prescription drugs.

That's where a Medicare Set-Aside comes into play. As the name suggests, it’s a designated sum set aside to cover medical expenses related to an injury.

Let's look at what a Medicare Set-Aside is, its necessity, and how the funds are used once they are set aside.

What's a Medicare Set-Aside?

If you suffer an injury or illness at work, your employer may provide financial compensation — known as worker’s compensation — to help pay your medical expenses and lost wages.

A Medicare Set-Aside (MSA), also known as a Worker's Compensation Medicare Set-Aside (WCMSA), is a fund drawn from your worker's compensation settlement for future medical expenses. The amount of the WCMSA depends on your particular case and can vary from person to person.

The MSA ensures that Medicare's interests are protected and that Medicare does not pay for medical expenses that should be the responsibility of the workers' compensation carrier or liability insurer.

MSAs are used in case of severe or long-term injuries or illnesses and can either be a lump sum or a structured settlement.

What's a Medicare Set-Aside Account?

A Medicare Set-Aside account, or WCMSA account, is a separate interest-bearing account where you allocate your worker's compensation fund for future medical expenses.

Interest from these funds must remain in the account and can only be used for medical expenses.

The funds from a settlement can be added to a WCMSA in one lump sum or through a structured settlement annuity that refills the account gradually over time.

When Do You Need a Medicare Set-Aside?

Medicare Set-Aside (MSA) isn't mandatory. However, it's used to set aside money from a settlement to pay for future medical expenses related to your work injury or illness. 

An MSA report, a document outlining injury-related expenses, can be made simpler by having a Medicare Set Aside (MSA) account in place. Since your MSA account funds are only used to cover your work-related injury expenses, it's easy to manage and report these expenses to Medicare.

Medicare may review the allocation report, called the MSA report, if:

• You're a Medicare beneficiary getting a worker's compensation settlement of more than $25,000.

• You're receiving a worker's compensation settlement and will be eligible for Medicare within the next 30 months with a total settlement amount of more than $250,000.

Can I Use My Medicare Set-Aside Funds for Personal Expenses?

No.

Once you open a Medicare Set-Aside account, it can only be used to pay for medical expenses and prescription drugs related to the workers' compensation claim, i.e., those medical expenses resulting from the work injury. Medicare should cover these expenses otherwise.

Note that this applies even if you're not yet enrolled in Medicare.

What Happens When My Medicare Set-Aside Funds Are Exhausted?

If the funds in your Medicare Set-Aside (MSA) account are used up, Medicare will become the primary payer. Medicare will cover all the medical expenses related to your injury or illness, provided that you meet certain requirements.

Medicare will provide coverage only if:

• You're a Medicare beneficiary

• The MSA funds were used according to the Medicare guidelines

• The MSA expenses were reported to Medicare

Medicare guidelines and regulations are complex, so it's a good idea to talk to a professional who can help you understand your policy benefits.

Getting professional help can assist with coordinating benefits, obtaining approvals, and monitoring funds to ensure compliance with Medicare regulations, heading off potential issues. This helps get your medical expenses covered after your MSA funds are depleted.

Once Medicare steps in, you'll be subject to the same co-pays, coinsurance, and deductibles as other Medicare beneficiaries for treatments related to your injury.

What Happens to the Unused Medicare Set-Aside Funds?

At the end of each year, unused funds are carried over to the next year.

If your worker compensation is deposited annually, you can use it together with Set-Aside funds carried over from the previous year for your medical expenses.

What Happens to the Unused Medicare Set Aside Funds in Case of Death?

In case of death, any unused funds in the Medicare Set-Aside account will be disbursed to a beneficiary(s) named in the settlement agreement after a waiting period of twelve months.

During this period, providers, physicians, and other suppliers can submit their bills to Medicare for reimbursement.

After the waiting period, the administrator will disburse any remaining funds to the designated beneficiaries.

Beneficiaries can include family, friends, or charitable organizations.

Access Medicare Benefits by Staying Compliant

A Medicare Set-Aside or WCMSA is a dedicated fund from your worker's compensation settlement that covers medical expenses related to a work injury. This means your worker's compensation is the primary payer for all medical expenses related to your work injury until funds in your WCMSA are depleted. At this point, Medicare becomes the primary payer. Compliance with federal guidelines and regulations is mandatory to access Medicare benefits.

The Medicare Set-Aside rules and regulations can be confusing, but it's necessary to comply with them to get benefits.

Contact our advisors at Fair Square Medicare if you have any questions or need clarification. You can also call us at 1-888-376-2028 for assistance understanding and managing your Medicare Set-Aside account.