Medicare Set Aside Accounts (MSAs): History and Relationship to Workers’ Compensation Insurance

HISTORY OF THE MEDICARE SET ASIDE ACCOUNT

If you are litigating a workers’ compensation case and requests for future medical compensation on a work-related injury or illness, you will encounter the term Medicare Set Aside (MSA). The MSA is an account set up to receive funds from the employer’s insurance company which covers medical bills for a set amount of time.

Medicare, which began in 1966, was initially responsible for all payments on medical claims. The only exemptions were benefits paid for workers’ compensation, Veteran’s Administration (VA), and the Federal Black Lung Program.

The creation of MSAs began with the Medicare Secondary Payer Act (MSPA), 42 U.S.C. § 1395y(b) in 1980 which shifted responsibility to insurance companies to pay medical bills (in most circumstances), instead of Medicare being the primary payer. The MSPA lists all circumstances where Medicare will not pay for services when another party (insurance company) should be paying the benefits (conditional payments). Medicare, now known as the Medicare Secondary Payer (MSP), only steps in to pay benefits in specific circumstances listed here.

In 2001, the Patel Memo (developed by Parashar B. Patel et al.) was written to further define Medicare’s role as either a primary or secondary payer for medical bills. The memo set criteria for determining financial responsibility under the various circumstances that could occur in most typical situations. This defining foundation remains largely in place today.

THE MSA ACCOUNT

In claims litigation settlements, an MSA account is created whereby a calculated amount of required healthcare benefits (based on the patient’s current and past history of payments), enough to cover a certain span of time in the future (commutation case), is deposited by the insurance company. A full accounting of every payment made for medical services must be submitted to Medicare each year until the account (or trust) is empty. Only then can Medicare step in to cover medical expenses, based on the medical status of the patient.

To be eligible for Medicare coverage and benefits, the patient must be a paying subscriber to Medicare (paid into Medicare during working years) and must have faithfully submitted all annual MSA accounting reports during the time before exhaustion of the fund. Typically, an MSA fund will have an administrator which can be yourself or a selected professional administrator independent of you, the patient. If you are self-administrating the fund (or plan to do so), go here to find out what you should know before making this choice. Find out more information here.

Always check with an Arizona workers compensation attorney to get the latest information available so you can make the best decision for yourself. Here are the guidelines that must be followed when managing an MSA account, according to Ametros.com:

• The MSA must be an interest-bearing account,
• Payments cover only those treatments related to the injury, as stated in the case,
• Only covers Medicare-related expenses, if Medicare were to be the payer,
• Payments follow an appropriate fee schedule,
• Annual accounting reports submitted to Medicare required, and
• Line-item details/descriptions required during the eligible time span.

THIRD-PARTY INJURY LAWSUITS

If you are in a lawsuit against a third party, independent of your employer and insurance company, be aware that you and your attorney must consider an MSA fund as part of the compensation. While there is no law (apparently) that dictates that this should be done, it may depend on whether the injured party is eligible for Medicare, is currently on Medicare, or will be eligible within a few years for Medicare coverage.

This should be addressed during the lawsuit proceedings to get a legal determination whether the MSA is required or not. Find more MSA information about this here. If a personal injury attorney does not check on this possible requirement and Medicare later determines that, based on the patient’s criteria, the MSA should have been done, the attorney can be fined $1,000 per event.

FINAL THOUGHTS

MSAs are essential to remaining financially solvent when undergoing medical treatments related to the injury. Having an MSA fund in place means other incoming payments can pay essential bills for the household and family, especially if children are still around.

Arizona Injury Law Group offers experienced and Certified Arizona workers compensation lawyers and legal services for injured workers. Call for your free consultation! 602-346-9009.