What You Need to Know about Medicare Set-Aside Accounts

Medicare Set-Aside Accounts have long been a staple of workers’ compensation cases, but a new proposed law seeks to make Medicare Set-Aside Accounts applicable to personal injury lawsuits, including medical malpractice lawsuits and other accident claims. As such, victims of all accidents and injuries – and not just the victims of workplace accidents – should be aware of Medicare Set-Aside Accounts.

The Chicago accident and injury lawyers at Cogan & Power, P.C. are dedicating to helping the victims of negligence obtain the financial compensation that they deserve and to educating accident victims on personal injury laws. As such, this article includes information discussing what you need to know about Medicare Set-Aside Accounts.

What Are Medicare Set-Aside Accounts?

Under the Medicare Secondary Payer Act (MSPA), Medicare is generally precluded from paying the beneficiary’s medical expenses when payment “has been made or can reasonably be expected to be made under a worker’s compensation plan, an automobile or liability insurance policy or plan (including a self-insured plan) or under no-fault insurance,” with Medicare payments conditional on reimbursement from the primary payer.

Medicare Set-Aside Accounts are funds from a judgment or settlement that are allocated to cover the future medical expenses of a Medicare beneficiary. Since Medicare is deemed a “payer of last resort,” if a Medicare beneficiary receives funds to pay for future medical treatment, those funds much first be used up before Medicare will pay for any health care expenses. If Medicare pays for medical services that should have been paid for with settlement or judgment funds, Medicare then has a right to recoup its payments from the beneficiary.

How Do Medicare Set-Aside Accounts Apply to Workers’ Compensation Cases?

Workers’ compensation settlements have long used Medicare Set-Aside Accounts to cover future medical expenses of the injured worker. For instance, as part of the workers’ compensation case, a Medicare review will be conducted to determine how much money should be allocated to future medical treatment and that amount will be put into a Medicare Set-Aside Account for future use.

How Would Medicare Set-Aside Accounts Apply to Personal Injury Settlements and Judgments?

Medicare Set-Aside Accounts will be a bit more complex if they are eventually used in personal injury lawsuits. Because settlements in personal injury cases typically resolve all claims associated with the accident, the settlement could include funds for medical expenses as well as property damage, pain and suffering, and lost wages. Consequently, it is often extremely difficult to determine the portion of a settlement that is attributed to future medical expenses.

The applicability of Medicare Set-Aside Accounts is also a bit uncertain with respect to personal injury cases, because there is no clear guidance in the MSPA as to when Medicare’s interest must be considered in negligence cases. Courts may look to existing workers’ compensation laws and standards, however, to determine the applicability of Medicare Set-Aside Accounts to personal injury settlements. If this is the case, an MSA would likely be required if:

  • the settlement exceeds $25,000 and the plaintiff is currently eligible for Medicare; OR
  • the settlement is for more than $250,000 and the plaintiff can reasonably be expected to become eligible for Medicare within 30 months.

As a result of the uncertainty associated with quantifying future medical expenses in personal injury settlements, some plaintiffs choose to hire, for a fee a professional who will analyze personal injury settlements to determine whether a Medicare Set-Aside Account needs to be created and, if so, the value of the Medicare Set-Aside amount.

How Can a Personal Injury Lawyer Help?

A skilled and experienced personal injury lawyer can and should help his or her client determine and implement the appropriate Medicare Set-Aside Account. The Chicago personal injury lawsuits at Cogan & Power are dedicated to guiding accident and injury victims through the entire legal process, including dealing with any potential Medicare Set-Aside issues.

If you were injured in a personal injury accident or would like additional information regarding Medicare Set-Aside Accounts, contact our office at (312) 477-2500 to schedule a free consultation with one of our Chicago accident attorneys.