Workers' Compensation and Medicare Interaction: Essential Information
Understanding the Relationship Between Workers' Compensation and Medicare Is Crucial
Ensuing that Medicare is notified about workers' compensation agreements is vital. Failing to do so may result in claim denials and the necessity to reimburse Medicare.
Workers' compensation serves as insurance for employees who have sustained job-related injuries or illnesses. The Office of Workers' Compensation Programs (OWCP), an agency under the Department of Labor, manages this benefit for federal employees, their families, and certain other entities.
Individuals currently on Medicare or approaching eligibility for the insurance program must acknowledge the potential impact of their workers' compensation benefits on Medicare's coverage for medical claims relating to work-related injuries or illnesses. This understanding is crucial to avoid complications concerning medical costs associated with workplace injuries.
How Does a Workers' Compensation Settlement Impact Medicare?
Medicare's secondary payer policy mandates workers' compensation to be the primary payer for any treatment received for a work-related injury.
In the event of immediate medical expenses arising prior to the recipient's workers' compensation settlement, Medicare may pay first and initiate a recovery process managed by the Benefits Coordination & Recovery Center (BCRC). Consequently, the Centers for Medicare & Medicaid Services (CMS) typically aims to monitor the amount a person receives from workers' compensation for injury or illness-related medical care.
In some cases, Medicare may request the establishment of a workers' compensation Medicare set-aside arrangement (WCMSA) for these funds. Medicare will only cover care once all the funds in the WCMSA have been depleted.
What Settlements Should Be Reported to Medicare?
Workers' compensation must provide a Total Payment Obligation to Claimant (TPOC) report to CMS to ensure Medicare covers the appropriate portion of a person's medical expenses. This report illustrates the total amount of workers' compensation owed to the person or on their behalf.
TPOC reports are required if the individual is already enrolled in Medicare (due to age or Social Security Disability Insurance eligibility) and the settlement is $25,000 or more.
TPOC reports are also essential if the person is not currently enrolled in Medicare but will qualify for the program within 30 months of the settlement date, and the settlement amount is $250,000 or more. Additionally, a person must report to Medicare if they file a liability or no-fault insurance claim.
Frequently Asked Questions
Individuals may contact Medicare with questions by phone at 800-MEDICARE (800-633-4227, TTY 877-486-2048). During certain hours, a live chat is also available on Medicare.gov. If a person has concerns regarding the Medicare recovery process, they can contact the BCRC at 855-798-2627 (TTY 855-797-2627).
A Medicare set-aside is optional. However, if a Medicare beneficiary wishes to set one up, their workers' compensation settlement must be over $25,000. Alternatively, it must exceed $250,000 if they are eligible for Medicare within 30 months.
It is prohibited to use the money in a Medicare set-aside arrangement (such as a WCMSA) for any purpose other than the designated purpose. Misusing the funds can lead to claim denials and the necessity to reimburse Medicare.
Medicare Resources
For more guidance on navigating the complex world of medical insurance, visit our Medicare hub.
Important Note: Eligibility criteria, reporting requirements, and threshold amounts may be subject to change. It is advisable to consult relevant authorities or legal representatives for the most accurate information.
Reporting Process and Requirements for Workers' Compensation Settlements
Effective April 4, 2025, new reporting requirements specifically concerning workers' compensation settlements with Medicare beneficiaries will become effective. The responsible reporting entities (such as workers' compensation carriers or their administrators) must report these settlements to CMS (Centers for Medicare & Medicaid Services) under Section 111 mandatory insurer reporting.
For workers' compensation settlements, the following five data points must be reported to CMS: WCMSA amount, WCMSA period, WCMSA funding method, initial deposit amount into the WCMSA, and anniversary (annual deposit amount, if applicable).
Reporting thresholds apply starting at $25,000. The information must be submitted through CMS's Section 111 reporting system, following the NGHP User Guide instructions. CMS reviews WCMSA amounts when the settlement exceeds $25,000 and the claimant is a Medicare beneficiary. Civil monetary penalties can be imposed starting October 2025 for failure to comply with these reporting requirements.
To report a workers' compensation settlement to Medicare, the Medicare beneficiary or their representative should ensure that the workers' compensation carrier or their administrator files a Section 111 report to CMS including the WCMSA data points listed above. This reporting must be done for settlements dated on or after April 4, 2025, and covers all settlements involving Medicare beneficiaries regardless of the amount, though review thresholds apply starting at $25,000.
Any Medicare beneficiary receiving such a settlement should confirm with their workers' compensation carrier or legal representative that the Section 111 report is properly submitted to maintain compliance and avoid payment or penalty issues.
- Medicare's secondary payer policy necessitates workers' compensation to be the primary payer for any treatment received for a work-related injury, according to the Centers for Medicare & Medicaid Services (CMS).
- Workers' compensation must file a Total Payment Obligation to Claimant (TPOC) report to CMS if the individual is already enrolled in Medicare due to age or Social Security Disability Insurance eligibility, and the settlement is $25,000 or more.
- For settlements involving individuals who will qualify for Medicare within 30 months of the settlement date and the settlement amount is $250,000 or more, Medicare requires TPOC reports even if the person is not currently enrolled in Medicare.
- In the cases where a Medicare beneficiary wishes to set up a workers' compensation Medicare set-aside arrangement (WCMSA), their settlement must be over $25,000 or exceed $250,000 if they are eligible for Medicare within 30 months.
