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 the workers’ compensation money that has been set aside must be spent before Medicare pays for medical services.

Terry Turner, writer and researcher for RetireGuide
Fact Checked
Fact Checked

Our fact-checking process starts with vetting all sources to ensure they are authoritative and relevant. Then we verify the facts with original reports published by those sources, or we confirm the facts with qualified experts. For full transparency, we clearly identify our sources in a list at the bottom of each page.

Cite Us
How to Cite RetireGuide.com's Article

APA Turner, T. (2021, August 5). What Is a Medicare Set-Aside Agreement (MSA)? RetireGuide.com. Retrieved January 28, 2022, from https://www.retireguide.com/medicare/coverage/coordination-of-benefits/medicare-set-aside/

MLA Turner, Terry. "What Is a Medicare Set-Aside Agreement (MSA)?" RetireGuide.com, 5 Aug 2021, https://www.retireguide.com/medicare/coverage/coordination-of-benefits/medicare-set-aside/.

Chicago Turner, Terry. "What Is a Medicare Set-Aside Agreement (MSA)?" RetireGuide.com. Last modified August 5, 2021. https://www.retireguide.com/medicare/coverage/coordination-of-benefits/medicare-set-aside/.

Why Trust RetireGuide.com
Why You Can Trust Us

Content created by RetireGuide and sponsored by our partners.

Key Principles

RetireGuide’s mission is to provide seniors with resources that will help them reach important financial decisions that affect their retirement. Our goal is to arm our readers with knowledge that will lead to a healthy and financially sound retirement.

We’re dedicated to providing thoroughly researched Medicare information that guides you toward making the best possible health decisions for you and your family.

We partner with Senior Market Sales (SMS), a leader in the insurance industry with over 30 years of experience and a network of 66,000 independently licensed agents across the United States.

Our partnership with SMS (and Insuractive, the company’s consumer-facing branch) allows us to deliver expertly researched and reviewed content at no cost or obligation to all of our visitors. It also gives our visitors the opportunity to take the next step in their Medicare journey by requesting help from our partner through the phone numbers or forms provided on our website.

If a visitor chooses to inquire about a health care plan through SMS as a result of our research and accurate information, RetireGuide may receive compensation for connecting the visitor with SMS. The revenue we earn for helping visitors get the help they’re seeking makes RetireGuide stronger for our audiences.

The content and tools created by RetireGuide adhere to strict Medicare and editorial guidelines to ensure quality and transparency.

Editorial Independence

While the experts from SMS are available to help you navigate various Medicare plans, RetireGuide retains complete editorial control over the information it publishes.

We operate independently from SMS, which allows the award-winning RetireGuide team to provide you with unbiased information.

Visitors can trust our inflexibility regarding our editorial autonomy. We do not allow our partnership to influence RetireGuide’s editorial content whatsoever.

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 system 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.

Examples of Workers’ Compensation Insurance Benefits
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 don’t 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, 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.

Your Workers’ Compensation Medicare Set-Aside Agreement is established after you reach a settlement 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 future medical bills related to your injury or illness.

MSA Account Rules
  • You must open an MSA account if your settlement amount is more than $25,000 and you are enrolled in Medicare ($250,000 if you are not enrolled in Medicare but may be in the future).
  • 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 other 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 — can be paid for out of your MSA account.

If you don’t follow the rules for how you can use your MSA account, you could be required to pay back the misspent money, or you could lose Medicare benefits that cover your injury or illness.

The WCMSA and your MSA account set the stage for coordination of benefits between workers’ comp and Medicare to make sure each pays the proper amount.

Medicare does not pay for medical services for this job-related injury or illness until you spend all the money in your 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 may involve both. Having Medicare review and approve your proposal for a set-aside can give you an accurate understanding of how much you have to pay from your MSA account before Medicare starts paying for medical care.

How to File a WCMSA Proposal
You can find a checklist and sample documentation for filing a WCMSA proposal on page 34 of “Medicare’s Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide.”
Source: U.S. Centers for Medicare & Medicaid Services

To apply for a set-aside with Medicare, you have to meet certain requirements and you have to submit a proposal. You should discuss with your workers’ compensation attorney how and when to submit your proposal.

When You May Submit a WCMSA 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’ll 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 also recommends 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.

Last Modified: August 5, 2021

4 Cited Research Articles

  1. 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
  2. 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
  3. 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
  4. 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