Workers' Compensation and Medicare: Essential Information
Navigating the waters between workers' compensation and Medicare is crucial to avoid expensive strife. Failing to notify Medicare about a workers' compensation settlement can result in claim denials, and compulsory repayments.
Workers' compensation insurance caters to employees who have sustained job-related injuries or illnesses. The Office of Workers' Compensation Programs (OWCP), under the Department of Labor, manages this benefit, providing coverage for federal employees, their families, and select entities.
As you edge closer to Medicare eligibility or are already enrolled in the insurance program, it's essential to grasp the potential effects of workers' compensation benefits on Medicare's medical coverage for work-related injuries. This understanding aims to steer clear of medical cost complications stemming from workplace injuries.
Workers' Comp Settlements and Medicare
Medicare adheres to the principle of being a secondary payer, with workers' compensation serving as the primary payer for work-related injury treatment. In scenarios where immediate medical expenses incur before settlement receipt, Medicare might pay first, instigating a recovery process overseen by the Benefits Coordination & Recovery Center (BCRC). To circumvent a recovery process, the Centers for Medicare & Medicaid Services (CMS) monitors the sum received from workers' compensation for injury and illness-related medical care.
In certain instances, Medicare may request the creation of a workers' compensation Medicare set-aside arrangement (WCMSA) for these funds. Medicare will only cover care post-WCMSA exhaustion.
Reportable Settlements
Workers' compensation is obliged to submit a total payment obligation to the claimant (TPOC) to CMS, representing the total workers' compensation sum owed to the person or on their behalf. TPOC submission is necessary if a person is already enrolled in Medicare or will soon qualify based on age or SSI eligibility, and the settlement exceeds $25,000. It's also mandatory for those who are not currently enrolled in Medicare but will within 30 months of the settlement date, provided the settlement value surpasses $250,000.
Beyond workers' comp, a settlement must also be reported to Medicare if a liability or no-fault insurance claim is filed.
FAQs
You can contact Medicare for assistance by dialing 800-MEDICARE (800-633-4227, TTY 877-486-2048), or through a live chat on Medicare.gov. If you have queries regarding the Medicare recovery process, you can reach the BCRC at 855-798-2627 (TTY 855-797-2627).
Medicare set-asides are voluntary. However, you will need a workers' compensation settlement surpassing $25,000 (or $250,000 within 30 months of eligibility) to establish one.
Misusing funds in a Medicare set-aside arrangement for unintended purposes can lead to claim denials and ensuing reimbursement obligations to Medicare.
"Learn more: What to know about Medicare set-aside arrangements"
The Bottom Line
Workers' compensation serves as insurance for job-related injuries or illnesses, covering federal employees and select groups. To sidestep medical expenditure complications, it's essential for Medicare beneficiaries or soon-to-be enrollees to familiarize themselves with how workers' compensation might impact their Medicare coverage. Adequate notification to Medicare about workers' compensation agreements is vital to avoid future claim denials and repayment obligations.
Stay tuned for more resources to navigate the intricate landscape of medical insurance at our Medicare hub.
Enrichment Data:
As of April 4, 2025, reporting requirements for workers' compensation settlements have been updated. Here are the key points:
Reporting Requirements
- Mandatory Reporting: All full and final workers' compensation settlements involving Medicare beneficiaries must be reported to Medicare, regardless of the WCMSA amount or settlement value below $25,000[1][3].
- Section 111 Reporting: The settlement details must be reported through the Section 111 reporting process[1].
- Effective Dates: These new reporting standards apply to settlements approved and payable on or after April 4, 2025, or if no judge approval is required, then the date the settlement agreement is signed[2].
Non-Compliance Implications
- Civil Penalties: Non-compliance can result in civil penalties[1].
- Future Denial of Medicare Benefits: Injured workers may face denial of future Medicare benefits if their employer fails to report properly, leading to potential litigation against the employer if Medicare benefits are denied[1].
Practical Compliance Steps
- Process Review and Update: Insurance carriers, employers, and third-party administrators should update their internal processes for proper compliance[1].
- Training: Claims adjusters and legal teams should undergo training specific to these CMS updates to ensure proper WCMSA settlement handling[1].
- Monitoring CMS Updates: Stakeholders should regularly monitor CMS communications for policy changes and updates[1].
- It is essential for Medicare beneficiaries or soon-to-be enrollees to remain knowledgeable about the impacts of workers' compensation on their health-and-wellness, as the principle of Medicare being a secondary payer with workers' compensation serving as primary is crucial for addressing medical cost complications stemming from workplace injuries.
- In accordance with the revised reporting requirements that took effect on April 4, 2025, all full and final workers' compensation settlements involving Medicare beneficiaries need to be reported to Medicare, regardless of the Medicare set-aside arrangement (WCMSA) amount or settlement value.
- Workplace-wellness programs and science can play an integral role in preventing job-related injuries, fostering health-systems that prioritize employee health and safety, and thereby averting the costly strife that may result from misunderstandings or non-compliance regarding workers' compensation and Medicare.
