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.”

Medicare Set Asides

Medicare Set Asides

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

Medicare program.

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.