Medicare Set Aside (MSA) Accounts – How It Works

Medicare Set Aside Account

A Medicare Set Aside account, also known as an MSA, is an important component of the workers’ compensation payment landscape. Here’s the essential information you need to know about who qualifies for them, how they work, approved expenses, etc.:

What is an MSA?

An MSA is a settlement resulting from a workers’ compensation or personal injury claim. The settlement funds are ‘set aside’ in a special account to pay the claimants’ future costs for medical treatments and services. Once the funds are exhausted, only then will Medicare begin paying for the injured person’s qualified medical expenses as long as the person followed all the rules and regulations for expenditures and reporting.

Rules and Regulations

Medicare Set Aside account holders are required to report their expenditures on annual basis to the Centers for Medicare and Medicaid Services (CMS). They must hold on to all receipts in order to validate the expenses. As for qualified expenses, settlement funds can only be used to pay for treatments and prescriptions directly related to the injury. Plus, the claimant has to pay the approved Medicare rate for each service.

If account holders do not manage their MSA account properly, pay more than the approved amount for a service or treatment, or pay for non-allowable expenses from the account, they can face some serious repercussions, such as paying back the overages/improperly spent funds and jeopardizing future Medicare benefits.

Who Administers the Medicare Set Aside Account?

MSA account administration may be performed by the injured person (self-administered) or by a professional administrator. The party who administers the MSA (individual or administrator) must keep accurate records of all disbursements from the account for CMS reporting.

What are the Qualifications for an MSA?

CMS guidelines state that it will review new claims proposals for the following:

  • The claimant is a Medicare beneficiary and the total settlement amount is greater than $25,000.00; or
  • The claimant has a reasonable expectation of Medicare enrollment within 30 months of the settlement date and the anticipated total settlement amount for future medical expenses and disability/lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.00

What Happens When the MSA Funds are Gone?

Once all Medicare Set Aside account funds have been exhausted, a final audit is performed on expenditures. If the funds were used appropriately, then the injured person should receive Medicare benefits for medical expenses related to the claim.

How Does the Injured Person Access MSA Funds?

MSA funds are placed into an interest-bearing account. The account may have a linked debit card, or the account holder may withdraw funds for reimbursement for expenses related to the settlement. For any expense, the account holder must keep detailed records and receipts.

Keep in Mind!

  • MSA settlement money is only for approved medical services and other costs directly related to the specific injury
  • MSA accounts must be interest-bearing and the interest must stay in the account to be used for medical expenses
  • Recipients should keep ALL records and receipts for every expense paid for from the account
  • Recipients must provide an annual report to CMS detailing what has been spent from their account

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