Understanding the Interplay Between Workers' Compensation and Medicare: Key Points to Consider
The Lowdown on Notifying Medicare About Workers' Compensation Settlements
Navigating the interplay between workers' compensation and Medicare can be tricky, but it's essential to stay ahead of potential claim denials and reimbursement obligations.
Workers' compensation serves as insurance coverage for work-related injuries or illnesses, primarily for federal employees and certain other entities. The Office of Workers' Compensation Programs (OWCP) within the Department of Labor handles these benefits.
It's crucial for individuals enrolled in Medicare or approaching eligibility to understand how workers' compensation might influence Medicare's coverage of medical claims. This understanding can help avoid complications with medical costs for work-related injuries.
The Impact of a Workers' Compensation Settlement on Medicare
Medicare adheres to a secondary payer policy, making workers' compensation the primary payer for any treatment related to a work-injury. In the event of immediate medical expenses before settlement, Medicare may pay first and initiate a recovery process managed by the Benefits Coordination & Recovery Center (BCRC).
To avoid a recovery process, the Centers for Medicare & Medicaid Services (CMS) typically monitors the amount received from workers' compensation for injury or illness-related medical care. In some cases, Medicare may ask for a workers' compensation Medicare set-aside arrangement (WCMSA) for these funds, covering care only after the WCMSA funds have been depleted.
Settlements Requiring Medicare Reporting
Workers' compensation is required to submit a total payment obligation to the claimant (TPOC) to CMS, representing the total amount owed to the person or on their behalf. This submission is necessary for people already enrolled in Medicare based on age or Social Security Disability Insurance and for settlements totaling $25,000 or more.
Additionally, if a person not currently enrolled in Medicare but will qualify for the program within 30 months of the settlement date, and the settlement amount is $250,000 or more, a TPOC must be submitted.
Besides workers' comp, a person must also report to Medicare if they file a liability or no-fault insurance claim.
Addressing Frequent Questions
For any questions, contact Medicare by phone at 800-MEDICARE (800-633-4227, TTY 877-486-2048) during specific hours, and a live chat is available on Medicare.gov. For questions about the Medicare recovery process, contact the BCRC at 855-798-2627 (TTY 855-797-2627).
A Medicare set-aside is voluntary, and if a Medicare beneficiary wants to set one up, their workers' compensation settlement must exceed $25,000. Alternatively, it must be over $250,000 if the person is eligible for Medicare within 30 months. It's prohibited to use the money in a Medicare set-aside arrangement for purposes other than those designated, or misuse could lead to claim denials and reimbursement obligations.
"Learn more: Understanding Medicare Set-Asides**
Tips and Tricks
To report a workers' compensation settlement to Medicare, several steps and requirements must be adhered to:
- Medicare Set-Aside (MSA) Reports: If an MSA allocation is prepared, it must be reported to Medicare, regardless of CMS approval to ensure Medicare is aware of the available funds for future medical expenses related to the injury[5].
- Responsible Reporting Entities (RREs): RREs are responsible for reporting certain data points to Medicare to identify any available primary payer[4].
- Submission Process: The settlement details, including the MSA amount, must be entered into the appropriate fields during the reporting process, ensuring that Medicare has all necessary information to manage future payments[5].
- Record Keeping: Beneficiaries must maintain accurate records of all expenses from the MSA account, including itemized receipts, bank statements, and tax records to prove proper use of funds[2].
- Annual Attestation: Each year, within 30 days after the anniversary date of the settlement, beneficiaries must submit an attestation to Medicare's Benefits Coordination & Recovery Center (BCRC). This statement confirms that the MSA funds were used correctly for Medicare-covered, injury-related treatment[2].
- Compliance with MSA Guidelines: The funds must be used according to Medicare's guidelines for MSA funds. Any misuse or depletion of funds may result in Medicare denying payments until the funds are replenished and spent correctly[5].
Recent Developments
As of April 4, 2025, Medicare requires detailed reporting, even if the MSA is not submitted for approval, to ensure better tracking of MSA funds and primary payer determination[5]. Additionally, beginning July 17, 2025, CMS will no longer review or approve $0 WCMSAs, meaning Medicare's interests may be considered in alternative ways[3].
- In the case of a workers' compensation settlement, Medicare follow a secondary payer policy, making workers' compensation the primary payer for any treatment related to a work-injury.
- For individuals enrolled in Medicare or approaching eligibility, it's crucial to understand that workers' compensation might influence Medicare's coverage of medical claims, potentially avoiding complications with medical costs for work-related injuries.
- Workers' compensations are required to submit a total payment obligation to the claimant (TPOC) to Medicare if the settlement amount is $25,000 or more for those already enrolled in Medicare or for settlements totaling $250,000 or more for individuals eligible for Medicare within 30 months.
- Medicare encourages the use of a Medicare set-aside arrangement (WCMSA) for the funds received from workers' compensation for injury or illness-related medical care.
- To properly report a workers' compensation settlement to Medicare, several steps like maintaining accurate records, submitting annual attestations, and using funds according to Medicare's guidelines for MSA funds should be followed to ensure correct use of funds and proper reimbursement.
