Millenium Settlement Consulting

Medicare Set-Asides

Medicare Set-Aside Agreements: Plan More

A Medicare Set-Aside, or MSA, is an interest-bearing account, either professionally- administered or self-administered, that holds the funds to pay for future medical and drug expenses that would otherwise have been covered by Medicare. According to the CMS (Center for Medicare and Medicaid Services) Policy Memorandum of July 23, 2001, Structured Settlements have become the favored method of funding MSA’s because of the reduced cost to the parties.

What is the intent of The Medicare, Medicaid and SCHIP Extension Act of 2007?


The purpose of the act as stated in Section 2499 of the Social Security Act is to enforce Medicare’s Secondary Payer Rights that are outlined in the Medicare Secondary Payer Act of 1980.

What is the Medicare Secondary Payer Act (MSP)?


In 1980, Medicare was given a statutory right to be reimbursed for an injury victim’s medical expenditures AND a right to recover from the victim’s future medical expenses before its secondary coverage applies.

Historically, has the Medicare Secondary Payer Act been enforced?


Traditionally, Medicare’s right to reimbursement and recovery has been enforced in Workers’ Compensation cases by the CMS. To date, this right has not been officially enforced against personal injury plaintiffs.

How does a MSA relate to liability cases?


MSA’s are not required for Liability cases. Only Medicare claims for services provided prior to settlement are required to be settled and repaid. There has been a lot of unsubstantiated discussions about MSA’s becoming mandatory; yet, they remain completely voluntary.

Is a MSA obligatory?


MSA’s are not obligatory for either Liability cases or Workers’ Compensation claims. MSA’s are one of many methods to satisfy Medicare’s requirement that future medical costs must be addressed for Workers’ Compensation claims. MSA’s are strictly voluntary.

The specific tax rules of a structured settlement are governed by Section 104(a) and Section 130 of the Internal Revenue Code. Once a settlement agreement is reached, it is irrevocable. As every individual and case is unique, a structured settlement is not right for everyone. Therefore, it is essential to seek appropriate legal and financial advisement.

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