Workers' Compensation and Medicare: Essential Facts to Understand
Working with Medicare and Workers' Compensation: A Comprehensive Guide
Navigating the intersection of Medicare and workers' compensation can be tricky, but it's crucial to avoid claim denials and reimbursement obligations. Here's what you need to know.
Workers' compensation is insurance for job-related injuries or illnesses that applies to federal employees and certain other groups. To ensure Medicare covers the appropriate portion of a person's medical expenses, it's essential to understand the connection between these two programs.
What Happens to Medicare When You Receive Workers' Compensation?
Under Medicare's secondary payer policy, workers' compensation must be the primary payer for any treatment a person receives for a work-related injury. However, if immediate medical expenses arise before the individual receives their workers' compensation settlement, Medicare may pay first and initiate a recovery process managed by the Benefits Coordination & Recovery Center (BCRC).
To avoid this recovery process, the Centers for Medicare & Medicaid Services (CMS) aims to monitor the amount a person receives from workers' compensation for their injury or illness-related medical care. In some cases, Medicare may ask for the establishment of a workers' compensation Medicare set-aside arrangement (WCMSA) for these funds. Medicare will only cover the care after all the money in the WCMSA has been exhausted.
When to Report Workers' Compensation Settlements to Medicare
Workers' compensation must submit a total payment obligation to the claimant (TPOC) to CMS to ensure Medicare covers the appropriate portion of a person's medical expenses. This represents the total amount of workers' compensation owed to the person or on their behalf.
Submitting a TPOC is necessary if a person is already enrolled in Medicare based on their age or based on receiving Social Security Disability Insurance and if the settlement is $25,000 or more.
TPOCs are also necessary if the person is 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.
In addition to workers' comp, a person must report to Medicare if they file a liability or no-fault insurance claim.
The Importance of Medicare Set-Aside Arrangements (MSAs)
An MSA is a voluntary arrangement in which a specific portion of a workers' compensation settlement is set aside for future Medicare-covered medical expenses related to the injury or illness. Misusing MSA funds can lead to claim denials and reimbursement obligations.
Steps to Report a Workers' Compensation Settlement to Medicare
- Understanding MSA Allocation Reports: An MSA Allocation Report outlines the anticipated Medicare allowable expenses related to the injury. These reports are crucial for protecting Medicare's interests in workers' compensation settlements.
- Reporting the Settlement: As of April 4, 2025, Medicare requires that settlements involving an MSA allocation must include this information in the WCMSA field during the reporting process.
- Maintaining Accurate Records: Beneficiaries must keep detailed records of all expenses paid from the MSA account, including itemized receipts, bank statements, and other proof of payments.
- Annual Attestation: Every year, no later than 30 days after the anniversary date of the settlement, beneficiaries must submit an attestation to Medicare's BCRC. This statement confirms that MSA funds were used correctly for Medicare-covered, case-related expenses.
- Notify Medicare of MSA Fund Exhaustion: Once the MSA funds are depleted, notify Medicare to ensure they are aware that the funds have been used according to their guidelines.
By following these steps, Medicare beneficiaries can ensure compliance with Medicare's requirements and avoid issues related to claim denials or reimbursement obligations.
- Under the Medicare secondary payer policy, health systems should understand that workers' compensation must be the primary payer for any treatment related to job-related injuries or illnesses, as it may lead to Medicare paying first and initiating a recovery process managed by the Benefits Coordination & Recovery Center (BCRC).
- To prevent Medicare from paying for medical expenses that are already covered by workers' compensation, science and health-and-wellness experts suggest establishing a workers' compensation Medicare set-aside arrangement (WCMSA) for the funds received from workers' compensation.
- In the field of health-and-wellness, it's important to note that nutrition and therapies-and-treatments expenses related to work-related injuries or illnesses may be covered by Medicare only after all the money in the WCMSA has been exhausted.
- Working with Medicare and Workers' Compensation: A Comprehensive Guide highlights the importance of reporting Workers' Compensation settlements to Medicare, especially when the settlement is $25,000 or more, or if the person will qualify for Medicare within 30 months of the settlement date and the settlement amount is $250,000 or more, to ensure the correct portion of medical expenses is covered by each program.
