Medicare is always supposed to be secondary to all forms of insurance according to federal law. This means that when there is a primary payer for injury related care, they are supposed to pay first. Therefore, if you have a workers’ compensation claim or a third-party personal injury case, you aren’t supposed to settle with the insurance company and then bill Medicare for those injury related treatments. Instead, a set aside is done where a portion of the settlement is placed into a segregated account and used to pay for Medicare covered care until exhaustion. Once the set aside is exhausted, Medicare should be again billed for injury related care. You can think of the set aside as a large deductible for injury related care.
According to Medicare:
The burden of future medical expenses in a personal injury case may not be shifted to Medicare. Federal law provides that Medicare’s interest must be considered in injury settlements, when future medical expenses are a component of the settlement.
Because Medicare does not pay for an individua’s l injury related medical services when the individual receives a settlement that includes funds for future medical expenses, it is in the best interest of the individual to consider Medicare at the time of settlement. For this reason, CMS recommends that parties to a settlement set aside funds, otherwise known as a Medicare Set-aside Arrangements (MSAs) for all future medical services related to the injury or illness/disease that would otherwise be reimbursable by Medicare.
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