The Settlement Alliance

What Purpose Does a Medicare Set-Aside Serve?

What Purpose Does a Medicare Set-Aside Serve?

Apr 4, 2017

Claimants who are currently on or expect to be on Medicare in the near future need to pay special attention to how their injury-related medical expenses are handled. Medicare Secondary Payer laws stipulate that Medicare’s interests must be adequately considered. In the event that a Medicare beneficiary receives an injury settlement, Medicare should not pay for medical costs that should otherwise be covered by a portion of the settlement. Depending on the details of your client’s case, setting up a Medicare Set-Aside may be an appropriate step to take.

What is a Medicare Set-Aside?

A Medicare Set-Aside (MSA) is an interest-bearing account established to cover any of the Medicare beneficiary’s injury-related medical expenses that Medicare would otherwise pay. The account can be funded with either a lump sum or a structured settlement annuity. The amount with which to fund the MSA is determined by calculating a projection of the total related medical expenses of an injured individual. Establishing an MSA helps ensure that:

  • All future costs of medical care and expenses have been evaluated and the appropriate amount will be available to pay for those expenses
  • Medicare will not pay for medical costs that should be paid out of the settlement
  • Medicare will resume paying the medical costs of the beneficiary once the amount in the MSA is lawfully exhausted

Federal law has very strict guidelines as to which goods and services can be paid for by funds in the MSA (remember: they have to be costs that Medicare would otherwise pay for, so they need to be Medicare eligible). For instance, Medicare does not cover dental services. If your client needs dental work as the result of their injury, the MSA should not pay for the dental work.

How Do You Know When an MSA is Needed?

A Medicare Set-Aside is not right for every case. The Centers for Medicare and Medicaid Services (CMS) recommends using an MSA for workers’ compensation cases, but it is not required (the requirement is simply to protect Medicare’s interests). In fact, CMS will only review a Workers’ Compensation Medicare Set-Aside (WCMSA) proposal if meets certain workload review thresholds (see the WCMSA Reference Guide for more information). CMS has been even less clear on its requirements for liability cases, although in the past few years, it has been making moves to potentially implement a formal review process for Liability Medicare Set-Asides (LMSAs) as early as 2018. Needless to say, it is vital that you and your client work with experienced Medicare experts to determine the best course of action.

Contact us with your Medicare Set-Aside questions

Regardless of whether your client has a workers’ compensation or a liability case, make sure you bring a settlement planner in as early as possible to help determine what steps need to be taken to protect Medicare AND your client. Contact our experts today at 800-464-2500 or

We are proud to partner with the highest rated structured settlement providers in the industry:

  • American general Life Companies
  • Berkshire Hathaway Structured Settlements
  • MetLife
  • Mutual of Omaha
  • New York Life
  • Pacific Life
  • Prudential