Workers’ Compensation Settlements: Medicare Set Asides
The workers’ compensation process can be confusing, especially for injured workers who just want
to get back to their pre-injury lives. While the system was created to streamline cases involving
workplace injuries, the numerous statutes and rules that are govern these types of cases can get
complicated, especially when federal benefit programs are involved. For example, what if a
worker’s injuries require prescription medication or other care that may one day be covered by
Medicare? In this situation, as part of a settlement agreement, there will also be money that is
designated as a “medicare set-aside.”
What is a Medicare Set-Aside?
A Medicare set-aside is part of a settlement agreement that designates a portion of a workers’
compensation settlement amount to pay for future medical treatment related to the workplace
injury. Set-aside accounts are required as part of workers’ compensation settlement agreements
because Medicare is considered a second payer, which means that it wants to ensure that any
treatment that is related to the workplace injury is first payed by the workers’ compensation
insurer. Once the money in the set-aside account is depleted, so long as certain conditions have
been met, taxpayer money is then used to pay for medical treatment that is covered pursuant to the
When is a Medicare Set-Aside Required?
While an attorney can provide more information, a Medicare set-aside is generally required in two
situations. First, it is required whenever an injured worker is currently designated as a Medicare
beneficiary and the settlement amount is more than $25,000. The second situation is a bit more
complicated. The second reason a Medicare set-aside account is necessary is two-pronged. Even if
an injured worker is not a current Medicare beneficiary, if there is a reasonable expectation that the
injured worker will be eligible for Medicare within thirty months of the settlement day, and if the
total settlement amount is expected to be greater than $250,000, then a set-aside will be necessary.
The total settlement amount not only includes any lump sum cash settlement, but it also takes into
account the amount that has been calculated for future medical expenses and disability or lost
wages over the life of the settlement.
Being injured at work can change someone’s life forever. Oftentimes, the highest priority of the
injured worker is to recover their health and return to the life they had pre-injury. Unfortunately
that is not always possible. Workers’ compensation laws were designed to help an injured worker
receive immediate care and treatment for a workplace injury without having to go to court. While it
is true that a large majority of cases no longer go through the court system, there are many other
administrative obstacles to navigate in order to ensure an injured worker receives the care and
treatment they deserve. Medicare set-asides are just one more element to workers’ compensation
law and it is advisable to obtain advice from someone who has experience in these matters before
entering into any settlement agreement.