Medicare Set-Asides with Structured Settlements
There are two approved methods for funding a Workers’ Compensation Medicare Set-Aside Arrangement, per Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide, Version 2.8 October 1, 2018, COBR-Q4-2018-v2.8.
These are “Lump-Sum WCMSAs” and “Structured WCMSAs”.
In the Lump-Sum method, the face amount of the MSA is deposited in a separate, interest bearing account and applicable medical bills are paid from these funds. Once the funds are properly exhausted, Medicare will resume the roll of primary payer and will begin to pay for these treatments.
When using the Structured funding plan, an initial deposit to a separate, interest bearing account is made, consisting of the projected cost for any initial surgery or replacement, plus the projected annual amount for the first two years of payments. Additional annual payments, beginning one year from the initial deposit, are made for the number of years projected in the MSA. Any funds not spent in a current year are rolled over into the next year and added to that year’s new payment. If the fund becomes properly exhausted at any time, Medicare will assume the roll as primary payer until the next MSA funding date.
Want to Save Money?
Often, the MSA can be funded with significantly less cash by employing the structured funding approach and using a Structured Settlement Annuity as the funding vehicle. The total of the initial deposit and the annuity premium can be 20% to 40% lower than the face amount of the MSA, making it a prudent choice in many cases. Also, the reduced cost can often easily pay for professional MSA administration, assuring that the funds are spent properly and helping to extend the life of the MSA.