INTRODUCTION. Sometimes a worker hurt on the job will have both an Iowa Workers’ Compensation claim, and will also be eligible to receive Social Security disability payments and/or Medicare health insurance coverage. In this post I am going to talk about how Medicare Set Asides and Iowa Workers’ Compensation settlements interact. In some cases the injured worker may receive an award that provides for future medical care, or he may settle his case on an open file basis so that the workers’ compensation insurance carrier remains responsible for future medical care of the work injury. If your case can be resolved on this basis there is no need to obtain or worry about a Medicare Set Aside.
However, in other cases the best settlement option might include the worker giving up their right to future medical care paid for by the workers’ compensation insurance carrier. If in a settlement with “closed” medical the injured worker is already receiving Medicare coverage, or has a good chance to receive Medicare coverage in the future, then the settlement needs to include setting aside a sum of money to pay for the future medical care relating to the work injury. This sum of money for future medical care is called a Medicare Set Aside.
FIRST CAUTION. The development of the Medicare Set Aside law and procedures is relatively new. Additionally, the rules and procedures are both uncertain and in a state of flux. Small variations in the facts of each case can also lead to very different results. This is all a very long way of saying that you need to be extra careful if you become involved in Medicare Set Aside issues. In this post I am only giving a very simple overview of the current state of the law and procedures.
WHAT HAPPENED IN THE PAST THAT LED TO THE REQUIREMENTS FOR MEDICARE SET ASIDES? I find that it helps people understand Medicare Set Asides better by learning a little bit about how things were handled prior to the Medicare Set Aside requirements. In the past the injured workers and the defendants sometimes agreed to settlements in which the worker was paid a large amount of cash, but the defendant’s duty to provide future medical care was given up or extinguished. Frequently the workers that were involved in these settlements ended up receiving Medicare health insurance coverage and Medicare paid for the medical care that had actually been caused by a work injury.
Eventually, Medicare discovered that these kinds of settlements were happening, and that Medicare (and in effect all taxpayers) were paying for medical care for work injuries that more appropriately should have been paid for by the employers and workers’ compensation insurance carriers.
Therefore, Medicare set up rules that require that if a worker and the defendants are going to release the defendants from having to pay for future medical care, and the worker is on Medicare or likely to be on Medicare in the near future, then the settlement also has to provide a procedure and mechanism for paying for the future medical care so that Medicare will not have to.
WHAT IS A MEDICARE SET ASIDE? A Medicare Set Aside is a special account of money funded by the workers’ compensation defendants designed to pay for all future medical care that the worker will need for the rest of their life relating to the work injury.
Medicare has very detailed rules about how to calculate how much money should be put in the Medicare Set Aside.
WHEN DO YOU NEED A MEDICARE SET ASIDE? As a very general matter if you are settling a workers’ compensation case and “closing” your right to receive future medical care from the work comp defendants, and there is a risk that you may end up on Medicare in the future and need treatment for your work injury, then you potentially need a Medicare Set Aside.
There are two situations in which an injured worker settling his workers’ compensation case and giving up his right to future medical care from the defendants definitely needs a Medicare Set Aside:
1. If the injured worker is already Medicare eligible, and the total settlement value is greater than $25,000.
2. If there is a reasonable expectation that the injured worker will be eligible for Medicare within 30 months of the date of settlement; and the total settlement value exceeds $250,000.
WHY DO YOU NEED A MEDICARE SET ASIDE? If an injured worker gives up their right to future medical care as part of their workers’ compensation settlement and ends up on Medicare, then Medicare is going to refuse to pay for any medical care that was caused by the work injury. In other words, if you give up your right to future medical care as part of your work comp settlement, you need to have a Medicare Set Aside account to pay for any future medical care because Medicare is not going to pay.
HOW DO YOU CREATE A MEDICARE SET ASIDE? The requirements relating to designing, submitting, and getting a Medicare Set Aside approved are very complex. Therefore, in most cases it is necessary to hire a company that regularly consults in Medicare Set Asides to perform the necessary analysis and handle all the paperwork.
Once the Medicare Set Aside account is created it can be funded by the defendants in several different ways. Sometimes the parties agree that the Medicare Set Aside account will be funded by a single lump sum paid in at the time settlement is approved. In other situations the parties may agree that the defendants will fund the Medicare Set Aside account by multiple payments made over a period of time.
SECOND CAUTION. The Medicare Set Aside area is so detailed and difficult that I am putting two cautions in this post. If you have a work injury where the issue of a Medicare Set Aside has come up you should not try to work out the settlement on your own. You need to talk to lawyers that are experienced in dealing with Medicare Set Asides.