When the Centers for Medicare and Medicaid Services (CMS) announced that there would be changes to Liability Medicare Set-Asides (LMSAs) last October, plaintiff attorneys and settlement planning professionals were forced to reassess their services to facilitate a new wave of relatively unclear guidelines regarding liability settlements.
Although this legislation is nearly a year old, there is still a lot of confusion in the air regarding LMSAs. In this article, the settlement experts at Synergy Settlement Services will explain what an LMSA is, and what trial lawyers need to know about LMSAs to avoid any legal follies.
Change Request 9893
When CMS enacted Change Request 9893, they modified the policies, procedures, and system updates that help maintain the LMSA and No-Fault Medicare Set-Aside (NFMSA) MSP record to make it more similar to the Workers’ Compensation Medicare Set-Aside Arrangement MSP record. Change Request 9893 also plays a role in instructing Medicare Administrative and Recovery Contractors (MACs) on qualifications for denying payment for provisions of materials and labor that should be compensated from an LMSA or NFMSA fund. Up until now, CMS had not yet provided the necessary framework for reviewing LMSA cases. Unlike Workers’ Compensation Medicare Set-Asides, it was difficult to truly decide whether or not the MSA was being funded in the correct amount.
The Bottom Line
The liability MSA has become a hot topic in the world of settlement planning, but there’s a lot of speculation about how changes to the structure of these programs will affect Americans. Here’s what we know for certain beyond a reasonable doubt: Medicare can deny payment for claims that are determined to be the responsibility of a liability insurance policy or another primary payer as outlined in the MSP provisions. This new change request will almost certainly slow the current rate of liability settlements, which means it will be more important than ever to work with an experienced settlement planning professional to avoid severe penalties.
Lump Sum or Structured Settlement?
A structured settlement is a comparably more cost-effective method of funding a liability MSA than a lump sum. Since a lump sum deposit is fulfilled in an amount equal to an expected surgery or replacement, plus two years of annual payments, remaining funds are divided into annual payments for the remaining years of a claimant’s life. This amount is then heavily taxed. On the other hand, structured settlements are exempt from taxation.
Dealing with LMSAs can be extremely confusing and tricky for those who have never experienced a significant workplace injury. The severe shortage of clear resources has made it nearly impossible to plan for an LMSA without the help of a knowledgeable settlement planner from Synergy Settlement Services.
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Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.