If you’re involved in a workers’ compensation settlement in North Carolina—or anywhere else—you may have heard the term “Medicare Set-Aside” (also known as an MSA). This process is important to understand, especially if you are eligible for Medicare or will be soon.
Here’s a breakdown in plain language to help you understand what an MSA is and when it’s necessary.
What Is a Medicare Set-Aside?
An MSA is a financial arrangement created as part of a settlement to protect Medicare’s interests. When you settle a workers’ compensation claim, the settlement may include money to cover future medical expenses related to your work injury. If Medicare will likely pay for these medical costs in the future, the government wants to ensure those funds are set aside and used for that purpose before Medicare steps in.
Simply put, an MSA is a special account funded with a portion of your settlement money. It’s used exclusively to pay for medical expenses related to your work injury that would otherwise be covered by Medicare. Once the MSA funds are exhausted, Medicare then takes over.
Thresholds for Requiring an MSA
Not every workers’ compensation settlement requires an MSA. The Centers for Medicare & Medicaid Services (CMS) has established specific thresholds to determine when an MSA is necessary:
Settlements of $25,000 or More for Current Medicare Beneficiaries:
If you’re already on Medicare, any settlement of $25,000 or more may likely require an MSA.
Settlements of $250,000 or More for Those Likely to Be on Medicare Soon:
If you’re not yet on Medicare but have a “reasonable expectation” of becoming eligible within 30 months (2.5 years), an MSA may be required if the settlement is $250,000 or more.
Examples of having a reasonable expectation include:
- You are 62.5 years or older (approaching Medicare eligibility at age 65).
- You’re receiving Social Security Disability Insurance (SSDI) or have applied for it.
- You have a medical condition that makes Medicare eligibility likely in the near future.
When Is an MSA Necessary in NC Workers’ Comp Settlements?
In North Carolina, as in other states, an MSA may be necessary when settling a workers’ compensation claim if future medical costs related to your work injury are expected and certain settlement requirements are met. For example, if you’re dealing with a long-term injury requiring ongoing treatments like surgeries, physical therapy, or prescription medication, CMS might require an MSA to ensure Medicare isn’t prematurely burdened with those costs.
In practice, MSAs are often part of workers’ compensation settlements involving older workers or individuals with severe, long-term injuries. The specific circumstances of your case will determine if an MSA is needed with advice of an experienced workers’ compensation attorney.
Why Is an MSA Important?
Failing to comply with Medicare’s requirements can lead to serious consequences, including Medicare refusing to pay for future medical expenses related to your injury. Working with an experienced attorney who understands MSA requirements is crucial. They can help ensure the arrangement meets CMS guidelines and that you remain compliant.
If you’re navigating a workers’ compensation settlement in North Carolina, consider whether an MSA is required based on your current or future Medicare status. Proper planning can often save you headaches down the road.
