A Medicare Set Aside Arrangement is a financial arrangement where the parties set aside a portion of a settlement for the payment of future medical expenses that would be related to the work injury. Medicare will not pay for any medical expenses related to the work injury until all the funds in the Medicare Set Aside are exhausted. The amount that needs to be set aside is determined on a case-by-case basis. Medicare's interest needs to be considered in EVERY settlement. However, Medicare will not review a set aside for its reasonableness unless: 1. You are are already on Medicare and the settlement is for more than $25,000; or 2. You are not yet on Medicare but have an expectation of Medicare entitlement within 30 months and the settlement is for more than $250,000. If the settlement does not meet the review thresholds, then the attorney representing the worker must work hard to ensure that Medicare's interests have been fully considered in the settlement and that appropriate funds are set aside.
Because, in this hypothetical instance, the injured worker is entitled to Medicare in a few months, it is vital that money be set aside for future medical treatment. The worker's doctors must be consulted to determine what future medical treatment is probable and then a cost needs to be attached to this treatment. Typically, insurance carriers use Medicare Set Aside vendors to gather this information, calculate the cost and then submit a proposal to Medicare. Once a proposal is submitted, it can take several months for the set aside to be reviewed and approved by Medicare. Once approved, the workers' compensation settlement can be finalized, and the injured worker will need to establish a separate account for the set aside money and will need to report how the funds are used yearly to Medicare.
This sounds like a huge hassle, and it is......but it is a very important process that must be taken in order to protect your future Medicare benefits. If a Medicare Set Aside is properly done and approved, and if you exhaust the funds in that set aside, Medicare will then pay for treatment related to the work injury. If, on the other hand, a set aside is not properly prepared, you may jeopardize your Medicare benefits.