Navigating Workers' Compensation and Medicare: Crucial Insights
Fresh Take:
Navigating Medicare and workers' compensation can be a tricky business. Neglecting to inform Medicare about a workers' comp arrangement might lead to claim denials and reimbursement troubles.
Workers' comp serves as insurance for employees who sustain on-the-job injuries or illnesses. The Office of Workers' Compensation Programs under the Department of Labor handles this benefit, extended to federal employees, their families, and other eligible entities.
It's vital for Medicare beneficiaries or those eligible for Medicare to understand the interactions between workers' comp and Medicare to prevent complications regarding medical costs connected to work-related injuries.
Workers' Compensation Settlements & Medicare:
Medicare adheres to a secondary payer policy, meaning workers' comp should be the primary source of payment for work-related injury treatment. However, if immediate medical expenses emerge before the beneficiary receives their workers' comp settlement, Medicare might pay first. In such cases, Medicare will initiate a recovery process handled by the Benefits Coordination & Recovery Center (BCRC).
To prevent a recovery process and ensure Medicare only covers the care after the workers' comp settlement funds are depleted, the Centers for Medicare & Medicaid Services (CMS) tends to track the amount a person receives from workers' comp for their injury-related medical care. Sometimes, Medicare may request the creation of a workers' compensation Medicare set-aside arrangement (WCMSA) for these funds. Medicare will only cover treatment once the WCMSA funds have been exhausted.
Reportable Settlements:
Workers' comp must submit a total payment obligation to the claimant (TPOC) to CMS to guarantee Medicare covers the right portion of the person's medical expenses. This information is required:
- When the person is already enrolled in Medicare based on age or Social Security Disability Insurance. Additionally, the settlement must be $25,000 or more.
- When the person is not currently enrolled in Medicare but will qualify for the program within 30 months of the settlement date. Here, the settlement amount should be at least $250,000.
- In cases when the person files a liability or no-fault insurance claim.
What's Next?
Ensuring Medicare coverage and avoiding potential reimbursement obligations requires careful adherence to the steps mandated by the Centers for Medicare & Medicaid Services (CMS):
Reporting Workers' Compensation Settlements to Medicare:
- CMS now needs a full report of all workers' compensation settlements involving Medicare beneficiaries, regardless of the settlement amount or threshold[1][3].
- The workers' compensation payer must submit the total payment obligation to the claimant (TPOC) to CMS[2].
- The data is reported to Medicare through Section 111 reporting requirements, including injury descriptions, diagnosis codes, settlement amounts, and personal identifiers for proper tracking and protection of Medicare's interests[4][5].
Medicare Set-Aside Arrangement (MSA):
- While not a statutory requirement, Medicare strongly encourages the use of MSAs for workers' comp settlements to allocate funds for future medical expenses related to the injury[3][5].
- CMS can review and approve MSAs to guarantee that the allocated funds adequately cover the beneficiary's future Medicare-covered treatment costs[3].
- The beneficiary is responsible for keeping treatment records and using the set-aside funds only for related medical expenses[3][5].
### Avoiding Reimbursement Obligations:
- Thoroughly comply with reporting requirements to avoid penalties and ensure Medicare's interests are flagged in their system[1][5].
- Adhering to an MSA arrangement helps protect the beneficiary from Medicare claim denials and minimizes the risk of Medicare seeking reimbursement for treatments paid after settlement funds should have been exhausted[3].
- Engage experienced professionals like vendors or legal advisors to help prepare an MSA and report to CMS, ensuring compliance with evolving 2025 standards and avoiding inadvertent penalties or coverage gaps[3][5].
- The Centers for Medicare & Medicaid Services (CMS) requires a full report of all workers' compensation settlements involving Medicare beneficiaries, including settlements with amounts less than the threshold, following Section 111 reporting requirements.
- Medicare set-aside arrangements (MSAs) for workers' comp settlements are not mandatory but are strongly encouraged by CMS to allocate funds for future medical expenses related to the injury and ensure adequate coverage of Medicare-covered treatment costs.
- Complying with reporting requirements and utilizing an MSA arrangement helps protect a beneficiary from potential Medicare claim denials, minimizes the risk of Medicare seeking reimbursement, and safeguards against penalties and coverage gaps.
- Engaging experienced professionals like vendors or legal advisors can help prepare an MSA, report to CMS, and ensure compliance with evolving 2025 standards, reducing the risk of inadvertent penalties or coverage gaps in healthsystems, health-and-wellness, therapies-and-treatments, and nutrition within the Medicare framework.
