What Is a Medicare Set-Aside Agreement (MSA)?
A Workers’ Compensation Medicare Set-Aside Arrangement is a financial agreement between Medicare and the Division of Workers’ Compensation regarding how to cover your future medical costs for a job-related injury or illness. All of the workers’ compensation money that has been set aside must be spent before Medicare pays for medical services.
- Written by Terry Turner
Senior Financial Writer and Financial Wellness Facilitator
Terry Turner has more than 30 years of journalism experience, including covering benefits, spending and congressional action on federal programs such as Social Security and Medicare. He is a Certified Financial Wellness Facilitator through the National Wellness Institute and the Foundation for Financial Wellness and a member of the Association for Financial Counseling & Planning Education (AFCPE®).Read More
- Edited ByLee Williams
Senior Financial Editor
Lee Williams is a professional writer, editor and content strategist with 10 years of professional experience working for global and nationally recognized brands. He has contributed to Forbes, The Huffington Post, SUCCESS Magazine, AskMen.com, Electric Literature and The Wall Street Journal. His career also includes ghostwriting for Fortune 500 CEOs and published authors.Read More
- Reviewed By Megan Christensen
- Published: December 3, 2020
- Updated: November 1, 2022
- 4 min read time
- This page features 4 Cited Research Articles
- Edited By
What Is a Workers’ Compensation Medicare Set-Aside Arrangement?
A Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) is an agreement that guarantees your workers’ comp insurance will pay its share of medical costs before Medicare pays. Workers’ compensation — sometimes called workers’ comp — is an insurance arrangement that covers your medical expenses if you are injured or become sick directly because of your job. Employers are required to pay for workers’ compensation insurance to cover your medical costs in the event of injury or illness.
Workers’ comp benefits can vary from state to state.
- Medical care
- Paid for by your employer to cover job-related injury or illness.
- Temporary disability benefits
- Payments to you to cover lost wages due to the injury or illness.
- Permanent disability benefits
- Continued disability payments if you do not fully recover.
- Supplemental job displacement benefits
- Help paying for job retraining if you don’t recover and can’t return to your old job.
- Death benefits
- Payments to your spouse or dependents if you die from a job-related injury or illness.
How Your Medical Bills Are Paid in a Medicare Set-Aside Arrangement
In the case of a Medicare set-aside arrangement, workers’ comp is the primary payer and Medicare is the secondary payer — meaning Medicare pays only after workers’ compensation has paid its share of your medical care for the work-related injury or illness.
A Workers’ Compensation Medicare Set-Aside Agreement is established after a settlement is reached in a workers’ comp or personal injury liability case.
The amount of money agreed to in the settlement is put into a special account called a Medicare Set- Aside Account, or MSA account. The money is used for the future medical bills related to your injury or illness.
- You must open an MSA account if your settlement amount is more than $25,000 and you are enrolled in Medicare. If you are not enrolled in Medicare currently but may be in the future, you must open an MSA account if the settlement amount is more than $250,000.
- You must keep MSA funds in a separate interest-bearing account.
- Interest earned must remain in the MSA account until used for qualified medical expenses.
- You must keep copies of bills, receipts and any other relevant records of every payment you make from the account.
- You must submit a detailed report of your spending from the MSA account to Medicare every year.
- Not all medications — including those you have been taking since before the illness or injury — are eligible for payment out of your MSA account.
If you don’t follow the rules for how you can use your MSA account funds, you could be required to pay back the misspent money, or you could lose Medicare benefits that cover your work-related injury or illness.
The WCMSA and your MSA account set the stage for coordination of benefits between workers’ comp and Medicare to ensure each pays the proper amount.
Medicare does not pay for medical services incurred from a job-related injury or illness until you spend all the money in the applicable MSA account.
Should You Submit a Proposal to Medicare for a Workers’ Comp Set-Aside?
If you have a workers’ compensation case, it may involve either past or future medical expenses or it could involve both. Having Medicare review and approve a proposal for a set-aside can give you an accurate understanding of how much you will from your MSA account before Medicare starts paying for medical care.
To apply for a set-aside with Medicare, you must meet certain requirements and then you must submit a proposal. You should discuss with your workers’ compensation attorney how and when to submit your proposal.
- Already enrolled in Medicare
- You are currently enrolled in Medicare, and the total amount of your settlement is more than $25,000.
- Not enrolled in Medicare
- You must have a “reasonable expectation” that you will enroll in Medicare within 30 months of your workers’ comp settlement and that the total settlement amount for future medical expenses, disability and lost wages will be more than $250,000.
Medicare does recommend filing a WCMSA proposal even if you have other health coverage through private health insurance, the Veterans Administration or a Medicare Advantage plan. Your MSA account usually has to be exhausted before the other coverage kicks in.
4 Cited Research Articles
- U.S. Centers for Medicare & Medicaid Services. (2020, October 2). Workers’ Compensation Medicare Set Aside Arrangements. Retrieved from https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Workers-Compensation-Medicare-Set-Aside-Arrangements/WCMSA-Overview
- U.S. Centers for Medicare & Medicaid Services. (2019, October 10). Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide. Retrieved from https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Workers-Compensation-Medicare-Set-Aside-Arrangements/Downloads/WCMSA-Reference-Guide-Version-3_0.pdf
- California Department of Industrial Relations. (2016, May). Answers to Frequently Asked Questions About Workers’ Compensation Employees. Retrieved from https://www.dir.ca.gov/dwc/wcfaqiw.html#:~:text=I%20entitled%20to%3F-,A.,your%20usual%20job%20while%20recovering
- U.S. Centers for Medicare & Medicaid Services. (n.d.). Workers’ Compensation and Payments. Retrieved from https://www.medicare.gov/supplements-other-insurance/how-medicare-works-with-other-insurance/workers-compensation-and-payments
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