What is the Legal Basis for Medicare Set-Asides?

A Medicare set-aside (hereinafter MSA) is a tool that allows injury victims to preserve Medicare benefits by setting aside a portion of the settlement money in a segregated account to pay for future Medicare covered services.? The funds in the set aside can only be used for Medicare covered expenses for injury related care.? Once the set aside account is depleted, an injury victim gets full Medicare coverage without Medicare ever looking to the remaining settlement dollars to provide for any Medicare covered health care.? If Medicare review of the MSA is available, Medicare will be bound by its determination once the MSA amount is fully funded and properly exhausted.

42 CFR 411.46 ? Lump-sum payments.
(a) Lump-sum commutation of future benefits. If a lump-sum compensation award stipulates that the amount paid is intended to compensate the individual for all future medical expenses required because of the work-related injury or disease, Medicare payments for such services are excluded until medical expenses related to the injury or disease equal the amount of the lump-sum payment.
(d) (2) If the settlement agreement allocates certain amounts for specific future medical services, Medicare does not pay for those services until medical expenses related to the injury or disease equal the amount of the lump-sum settlement allocated to future medical expenses.

A Medical Fund is a tool that allows an injury victim to protect Medicare benefits by allocating a portion of the settlement money in a segregated account to cover future Medicare eligible medical services. The funds in the set aside can only be utilized for Medicare eligible expenses linked to your personal injury settlement, award or judgment. Once the set aside account is depleted, you will receive complete Medicare coverage for your injury related conditions without Medicare ever considering your remaining settlement funds to cover any Medicare eligible healthcare. Medicare may authorize the allocated amount in writing and agree to assume responsibility for all future expenses once the set aside funds are exhausted. Presently, Medicare review is only applicable in workers’ compensation settlements that meet the voluntary internal workload review threshold of CMS. However, it is not mandatory for Medicare to review and approve the allocated amount.