Medicare and Workers' Compensation: Key Insights to Understand
Navigating the intersection of workers' compensation and Medicare is vital to avoid complications and potential financial burdens.
Workers' comp offers medical coverage for work-related injuries or illnesses and applies to federal workers, their families, and specific other entities. When Medicare-eligible individuals have job-related health issues, understanding how workers' comp may affect their Medicare benefits is crucial.
How does a workers' comp settlement interact with Medicare?
Under Medicare's secondary payer policy, workers' comp must cover treatment costs for work-related injuries first. If immediate expenses arise before the settlement, Medicare may pay initially and start a recovery process managed by the Benefits Coordination & Recovery Center (BCRC). To prevent this, the Centers for Medicare & Medicaid Services (CMS) frequently monitors workers' comp settlements for injury-related medical expenses. In some instances, Medicare may request the establishment of a workers' compensation Medicare set-aside arrangement (WCMSA) for these funds. Medical care will only be covered after the money in the WCMSA is expended.
Settlements that require reporting to Medicare
Workers' comp submits a total payment obligation to the claimant (TPOC) to CMS, which includes the total amount owed from workers' comp for injury-related medical care. TPOCs must be submitted if a person is on Medicare due to their age or Social Security Disability Insurance, and the settlement amount is $25,000 or more. TPOCs are also necessary if the individual is not yet enrolled in Medicare but will qualify within 30 months and the settlement is $250,000 or more. Additionally, any liablity or no-fault insurance claims should also be reported to Medicare.
General recommendations
To manage a workers' comp settlement effectively and prevent claim denials or reimbursement obligations, follow these recommendations:
- Reporting: Ensure that your workers' comp provider reports the necessary information to the Department of Health and Human Services and CMS.
- WCMSA: Consider setting up a Medicare Set-Aside to protect Medicare's interests. This involves reserving a portion of the settlement for future injury-related medical expenses.
- Professional Support: Engage a professional administrator to help ensure compliance with Medicare Secondary Payer regulations and manage your MSA funds.
- Claim Denial Prevention: Use MSA funds for injury-related care and report annually to minimize claim denials. If MSA funds are exhausted, Medicare may then cover future injury-related costs.
Starting July 17, 2025, CMS will no longer review or approve $0 WCMSAs, signifying a shift in how settlements are managed. By adhering to these guidelines, Medicare beneficiaries can effectively manage their workers' compensation settlements and minimize the risk of claim denials and reimbursement obligations.
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Medicare may require a report of the Total Payment Obligation to the Claimant (TPOC) from workers' comp if the settlement amount is $25,000 or more for individuals already on Medicare, or $250,000 or more for those who will qualify within 30 months.
To ensure effective management of a workers' comp settlement, follow recommendations such as reporting necessary information to the Department of Health and Human Services and CMS, considering a Medicare Set-Aside, engaging a professional administrator, and using MSA funds for injury-related care while reporting annually.
Starting July 17, 2025, CMS will not review or approve $0 WCMSAs, marking a change in how settlements are managed.
The health-and-wellness field, including therapies and treatments and nutrition, can provide valuable guidance for managing work-related health issues and navigating the intersection of workers' compensation and Medicare.
