As you approach the conclusion of a legal dispute regarding a workplace injury, the anticipation of a potential settlement is often overshadowed by the complexities of federal compliance.
For many North Carolina employees, the most significant hurdle to finalizing their claim is the Medicare Set Aside (MSA) workers’ comp requirement.
Navigating the intersection of state workers’ compensation laws and federal Medicare mandates requires precision. One mistake can jeopardize your future healthcare coverage.
If you are currently negotiating a settlement and need to ensure your Medicare benefits remain intact, the team at Mehta & McConnell, PLLC, is here to help. Our North Carolina workers’ compensation lawyers have the experience necessary to guide you through the process to protect your rights.
You can reach our lawyers at 980-326-2270.
Understanding the Medicare Secondary Payer (MSP) Act
The Medicare Secondary Payer (MSP) Act is a federal law that states Medicare cannot pay for medical services if payment has been made, or is reasonably expected to be made, under a workers’ compensation plan.
The purpose of the law is to prevent you from double-dipping. Essentially, the federal government does not want to pay for medical treatments that should be the responsibility of a workers’ compensation insurance carrier. When you enter into a workers’ compensation settlement, Medicare requires that a portion of that settlement be set aside to pay for future injury-related care.
What Is MSA in Workers’ Comp?
A Workers’ Compensation Medicare Set-Aside (MSA) (WCMSA), commonly referred to as an MSA in workers’ comp, is a financial arrangement that sets aside a portion of a settlement to cover future medical expenses related to a work injury that would otherwise be billed to Medicare.
The primary objective is to accurately estimate the total cost of work-injury-related care over the claimant’s entire life and secure those funds, either through a single lump-sum payment or a structured annuity.
Once the Centers for Medicare & Medicaid Services (CMS) approves the amount, the claimant must exhaust these specific funds on legitimate medical care before Medicare will begin paying for any further work-injury-related treatments.
Properly establishing a WCMSA is crucial because any settlement involving future medical care must account for Medicare’s interests. If these interests are ignored, CMS maintains a priority right of recovery and subrogation rights, allowing the government to demand repayment from any party that received the settlement funds or to step into the claimant’s shoes to pursue the responsible insurer.
Medicare may simply refuse to pay for any future medical services related to the work injury until the entire settlement amount is spent. To ensure accuracy, these arrangements are typically finalized only after a claimant’s medical condition has stabilized, allowing for a more predictable forecast of long-term costs.
When Do You Need an MSA Workers’ Comp Settlement?
While there are no statutory or regulatory provisions requiring that a Workers’ Compensation Medicare Set-Aside (WCMSA) proposal be submitted to the Centers for Medicare & Medicaid Services (CMS) for review, submission of a WCMSA proposal is a recommended process. CMS will only review an MSA workers’ comp settlement that meets the following criteria:
- The claimant is currently a Medicare beneficiary, and the total settlement amount is greater than $25,000; or
- The claimant has a reasonable expectation of Medicare enrollment within 30 months of the settlement date, and the total settlement amount exceeds $250,000.
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 and/or re-filing for Social Security Disability benefits;
- The claimant is 62 years and 6 months old; or
- The claimant has an End Stage Renal Disease (ESRD) condition, but does not yet qualify for Medicare based upon ESRD.
If one of these thresholds is met, a workers’ comp MSA can be submitted to CMS for approval.
What Is a Medicare Set-Aside Allocation Report?
A Medicare Set-Aside (MSA) Allocation Report is a detailed roadmap used to estimate the cost of your future medical care. Because Medicare will not pay for bills that a settlement is supposed to cover, these reports calculate a specific set-aside amount, money from your settlement reserved exclusively for your work-injury-related treatment.
How to Calculate Your Costs
To determine your specific set-aside amount, experts analyze your medical history and life expectancy to project future needs, including:
- Medical history—your current records and past treatment trends;
- Future procedures—anticipated surgeries, physical therapy, and diagnostic tests, such as MRIs or X-rays; and
- Prescriptions—the long-term cost of medications related to your injury.
By combining these factors, the report creates a comprehensive financial safety net designed to cover your injury-related medical needs for the rest of your life.
Managing the Funds
Once an amount is agreed upon, the money is placed into a dedicated account. Each year, the account manager, also called the administrator, sends a report to Medicare detailing exactly how the funds were spent. It is important to remember that Medicare will not pay for any treatment related to your injury until every cent in this set-aside account is exhausted first.
Funding Your Future, the Structured Settlement
Lifetime medical costs can be quite high, so many people choose to fund their MSA through a Structured Settlement Annuity rather than collecting a single lump sum. This approach is often a win-win. It allows the insurance carrier to fund the account over time, which is often more cost-effective for them, while guaranteed regular payments ensure the injured person has a reliable, long-term stream of money for their healthcare.
The CMS Submission and Approval Process
The CMS MSA review process is a voluntary procedure where you submit a proposed set-aside amount to Medicare for approval, provided the settlement meets specific financial thresholds. Obtaining this approval ensures that once the set-aside funds are properly exhausted, Medicare will cover any remaining injury-related medical expenses.
The Workers’ Compensation Medicare Set-Aside (WCMSA) approval process begins with submitting a proposal via the recommended online portal or by mail. Once received, the Workers’ Compensation Review Contractor conducts an independent evaluation of the medical and prescription drug costs to ensure Medicare’s interests are protected.
During this stage, the review contractor may request any missing documentation. After their assessment, the review contractor sends a recommended value and rationale to the assigned CMS Regional Office for a final determination.
The Regional Office reviews the package and notifies the submitter of their decision. If the submitter believes there is an error, they may be eligible to request a re-review. This request should be filed through the same channel as the original submission.
Having an NC workers’ comp lawyer during this phase is vital. If CMS demands an MSA far higher than the insurance company is willing to pay, the entire settlement could collapse.
Contact Mehta & McConnell Today
If you have been injured in the workplace and reached a settlement, it’s important that you understand what an MSA is in workers’ compensation. Between drafting a WCMSA proposal, seeking CMS approval, and determining the most effective way to manage the funds, the process is complex. Neglecting these MSA workers’ comp requirements doesn’t just complicate your settlement; it risks your future eligibility for Medicare benefits.
At Mehta & McConnell, PLLC, our board-certified workers’ compensation lawyers provide sophisticated legal advocacy that bridges the gap between state benefits and federal compliance. With over 40 years of combined experience, we prioritize your long-term well-being over a quick payout, ensuring every settlement has a foundation of security.
We ensure your WCMSA accurately reflects the medical care you will need years down the road, including whether a professional administrator is necessary to safeguard your funds and your future.
Contact Mehta & McConnell, PLLC, today for a free consultation, and let us handle your settlement with the highest level of professional care.
Frequently Asked Questions
What Is an MSA in Workers’ Compensation?
An MSA, or Medicare Set-Aside, is a portion of your workers’ comp settlement money specifically earmarked to pay for future injury-related medical treatments.
When Is a Medicare Set-Aside Required in a Workers’ Comp Settlement?
While technically the MSP Act requires protecting Medicare’s interests in all settlements, CMS typically only reviews cases where the claimant is a medicare beneficiary, and the total settlement amount is greater than $25,000; or the claimant has a reasonable expectation of medicare enrollment within 30 months of the settlement date, and the total settlement amount exceeds $250,000.
How Does the CMS MSA Approval Process Work?
The Workers’ Compensation Medicare Set-Aside approval process starts with submitting a proposal via the online portal or by mail. The Workers’ Compensation Review Contractor independently evaluates the report, then sends a recommended value and rationale to the CMS Regional Office for a final determination. The Regional Office’s decision results in an approval, denial, or closeout letter.
Who Qualifies for MSA in Workers’ Comp?
Any injured worker enrolled in Medicare, due to age or disability, or who is likely to enroll in the near future, should consider an MSA when settling the medical portion of their claim.
Legal Reference used to Inform This Page
To ensure the accuracy and clarity of this page, we reference official legal and other resources during the content development process:
- Medicare secondary payer (MSP) procedures, 42 CFR § 422.108 (2024).
- Exclusions from coverage and medicare as secondary payer,42 U.S.C. §1395y(b)(2)(A)(ii) (2024).
- Action by United States, 42 U.S.C. § 1395y(b)(2)(B)(iii) (2024).
- Workers’ Compensation Medicare Set Aside Arrangements, Centers for Medicare & Medicaid Services (Jan. 16, 2025).
Mehta & McConnell Injury Lawyers
Mehta & McConnell, PLLC was founded in 2021 to represent individuals who are injured at work or due to the negligence of someone else. Both of our attorneys began their careers as defense attorneys representing large corporations and insurance companies, but we now only represent injured individuals.