Many injured workers in Pennsylvania are receiving workers’ compensation benefits and are also entitled to, or have applied for, Social Security disability or retirement benefits. The majority of these individuals will also become entitled to the payment of medical expenses under Medicare. In the event he or she contemplates accepting a settlement of the workers’ compensation claim, the injured worker must be aware of the effect such a settlement will have on future Medicare benefit eligibility. In 2001, the Center for Medicare and Medicaid Services (CMS) began issuing guidelines to assist injured workers who wish to settle their claims and protect their right to future payment of Medicare benefits. Nearly 10 years later, CMS issued another Memorandum dated May 11, 2011, effectively reaffirming its position on such settlements and guidelines to insure protection of the right to Medicare benefits after a settlement.
The first analysis of any such settlement is to determine what benefits are being settled. Under the Pennsylvania Workers’ Compensation system, an injured worker may receive wage loss and medical benefit as a result of a work injury. If only the wage loss benefits are being settled and medical benefits will remain the responsibility of the workers’ compensation carrier, then there is no need to consider Medicare’s interests in any such settlement. However, where medical benefits are also being settled, CMS wants to assure that the burden for payment of such future medical benefits is not being shifted to Medicare, and also that Medicare has not paid any medical expenses for which the workers’ compensation carrier is responsible.
CMS stresses that Medicare’s interests in any potential settlement must always be considered. In order to protect Medicare’s interests, the injured worker should prepare a Workers’ Compensation Medicare Set-aside Agreement (WCMSA) which is a proposal outlining a specific amount of money that will be put aside to pay for expected future medical expenses that are related to the work injury. In the event CMS approves the WCMSA, then, after this fund is exhausted, Medicare will pay for any additional work related medical expenses. However, while the process is not required but merely recommended, CMS will only review and approve these WCMSAs under certain circumstances.
CMS’s criteria for review of a WCMSA fall into two categories. Under the first, CMS will review WCMSAs for injured workers where he or she is a current Medicare beneficiary and the total amount of the settlement is greater than $25,000.00. When the injured worker is not a current Medicare beneficiary, CMS review is available if the injured worker is “reasonable expectation” of becoming Medicare eligible within 30 months from the date of the settlement and the total amount of the settlement – including wage loss, medical benefits and attorney’s fees – is expected to be greater than $250,000.00. These guidelines are considered by CMS to be its “operational workload standard”. In other words, CMS deems settlements that fall within these criteria significant enough to require its intervention to assure Medicare’s interests are protected. However, CMS cautions that Medicare beneficiaries must always consider Medicare’s interests regardless of the ultimate value of the settlement.
Many of our clients have been or are in these situations. We take great care to review any WCMSA to assure that a workers’ compensation insurance carrier has properly considered our client’s interests, as well as Medicare’s. If you have questions about any of these issues as they apply to your workers’ compensation claim, please feel free to contact us.