Medicare Interactions with Workers' Compensation: Key Insights
Navigating workers' compensation and Medicare can be tricky, especially when it comes to claims over a certain amount. Here's a lowdown on what goes down when a settlement exceeds $25,000 or will impact Medicare within 30 months:
The Workers' Compensation Medicare Set-Aside (WCMSA) Scene
- Purpose of WCMSA: The primary aim of a WCMSA is to set aside funds for upcoming medical care that Medicare would ordinarily cover. This ensures that Medicare doesn't bill for expenses that should be covered by the workers' compensation settlement.
- Reporting Requirements: As of April 4, 2025, every settlement that involves a Medicare beneficiary, regardless of the amount, must be reported to Medicare via the Section 111 reporting process.
- Settlement Amounts: Whether it's a large settlement or a $0 WCMSA, if a claimant is a Medicare beneficiary, the settlement details must be reported to CMS.
- WCMSA Allocation: The WCMSA amount is calculated based on the estimated future Medicare-covered medical expenses.
Big Bucks, CMS Reviews, and Zero-Dollar Set-Asides
- Reporting Thresholds: There are no specific reporting thresholds of $25,000 or $250,000. However, all settlements involving Medicare beneficiaries must be reported.
- CMS Review: For bigger settlements, CMS may scrutinize the proposed WCMSA to ensure it covers future medical expenses adequately. This review isn't mandatory for all settlements but more common for larger amounts.
- Zero-Dollar Set-Asides: As of July 17, 2025, CMS will no longer accept or review proposals with a zero-dollar WCMSA allocation. Nevertheless, entities should still consider whether a zero-dollar allocation is appropriate and keep the necessary documentation.
- Amended Reviews: Amended review requests can now be submitted at any time after a WCMSA case is approved, unlike before when it could only be done within a year.
Compliance Matters
- Importance of Compliance: Failing to comply with these reporting requirements can lead to civil penalties or the future denial of Medicare benefits for injured workers. Employers and insurance carriers should ensure accurate reporting to avoid such implications.
- Practical Steps for Compliance: Stakeholders should review and update their internal processes, coordinate with MSP (Medicare Secondary Payer) compliance and legal counsel, and make sure their staff are well-versed in the latest CMS updates.
Staying informed and following the rules is crucial to protecting your interests and ensuring you get the support you deserve when dealing with workers' compensation and Medicare. To learn more and help you navigate this complex world of medical insurance, check out our Medicare hub.
- In the event of a large settlement exceeding $25,000 or expected to impact Medicare within 30 months, CMS may conduct a thorough review of the Workers' Compensation Medicare Set-Aside (WCMSA) to ensure it adequately covers future medical expenses.
- Regardless of the settlement amount, if a claimant is a Medicare beneficiary, it is mandatory to report the settlement details to the Centers for Medicare & Medicaid Services (CMS) via the Section 111 reporting process.
- As of July 17, 2025, CMS will no longer accept or review proposals with a zero-dollar WCMSA allocation, even though these cases should still be appropriately documented.
