Frequently Asked Questions

Concerning MSAs in General:
What is a Medicare Set Aside or MSA?
A Medicare Set Aside, or MSA, is an account created in the settlement of a Workers' Compensation or liability case. It is funded using a portion of the settlement proceeds to pay for future medical expenses related to the job/personal injury that would otherwise be payable by Medicare. Funds must be established in insured accounts and may be managed by the claimant or set up in a custodial account.
 
Why Are MSAs "Required"?
On December 5, 1980, the Medicare Secondary Payer Act extended Medicare's secondary benefit payer status to liability claims.  The Medicare Secondary Payer Act assures that Medicare will always be the secondary payer whenever payment has been made, or can reasonably be expected to be made, under a Worker's Compensation policy or liability insurance policy(including self-insured plans).  While these laws have been in place since 1980, very little enforcement of the statute occurred until budget concerns surrounding Medicare's longevity surfaced.  As a result, in July 2001, CMS began publishing a series of policy memoranda that discussed the use of Medicare Set Asides in Worker's Compensation cases. It is based on these CMS policy memoranda, when read in conjunction with the Medicare Secondary Payer Act and the affiliated federal regulations, that Medicare Set Asides are "required".
 
When are MSAs recommended in Worker's Compensation cases?
MSAs are recommended when the injured worker's settlement includes payment for future medical care which would otherwise be payable by Medicare.
 
When may a MSA proposal be submitted to CMS in Worker's Compensation cases?
MSAs may be submitted to CMS when:
• The injured/ill worker is, at the time of settlement, currently on Medicare and the total settlement value is over $25,000; or
• The total settlement value is at least $250,000 and the injured worker is reasonably expected to become entitled to Medicare within 30 months of settlement.
 
When are MSAs recommended in liability cases?
The rules are different for using a MSA in a liability settlement compared to using a MSA in a Worker's Compensation case. Misinformation in the marketplace has created unnecessary angst between claimants and carriers on this question. We suggest that the question should be answered on a case-by-case basis based on the case-specific facts. The Garretson Firm Resolution Group's MSA services are designed to help both claimants and carriers document their file and memorialize their efforts at considering Medicare's interests.

Concerning Custodial MSA Accounts:
•    How do I get started?
Upon receipt of a completed intake form , the required setup fee and the necessary seed money, Affiance will establish the MSA account. The claimant will receive a Welcome Packet and Affiance ID card in the mail shortly thereafter.

•    How much money is placed in the account?
The predetermined amount of money (either lump sum or seed amount with remainder annuitized) will be deposited into a claimaint specific account for administration on your behalf for future Medicare-covered, injury-related medical care.

•    How do I know how much is left in the account?
Affiance will provide annual reporting as required by the Centers for Medicare & Medicaid Services (CMS) to document what is spent from the account each year. You will receive quarterly updates showing all disbursements.

Concerning both Custodial and Self-Administered MSA Accounts:
When do I use my MSA account?
The funds in your MSA shall only be used for those Medicare covered medical expenses associated with your settlement-related injury. If you have any questions about what Medicare covers please refer to the Medicare & You handbook which lists services that are and are not covered by Medicare. You can also call 1-800-MEDICARE.

What happens if I use all of the money?
When MSA funds are depleted, either temporarily or permanently, an accounting must be supplied to CMS. Medicare will then begin to pay for any Medicare-covered medical treatment received as a result of the injury. Medicare providers should still bill Affiance, obtain our denial and forward with their submission.

What happens if the MSA account-holder dies?
In the event the account-holder passes away before the funds in the MSA Custodial Account are totally exhausted, the account will be kept open for 180 days from the date of death to allow any outstanding bills to be paid. (Affiance will ensure that this is done for custodial accounts.)Thereafter, any proceeds remaining in the MSA will be paid to the estate, or the designated remainder beneficiary.

Who is the remainder beneficiary?
The beneficiary can be a family member(s) or an estate.

Can the remainder beneficiary be a charity?
There are no Medicare rules concerning who can receive the remaining MSA funds after the beneficiary's death.

What about the interest earned?
The interest earned is added to the MSA funding and used to cover your expenses as required by CMS. It cannot be used for any reason outside of MSA parameters.

Who is taxed on the growth?
If a Form 1099-INT for the interest earned on a MSA account is received, an amount equal to the amount of incremental tax may be withdrawn by the administrator as a cost that is directly related to cover the additional tax liability. Such documentation should be submitted along with annual accounting. In the case of a custodial account, income generated from this account would likely be taxed to the remainder beneficiary after the MSA Custodial Account expires.

How do I pay for injury related expenses not covered by Medicare?
Monies designated for other medical expenses outlined in the Worker's Compensation or liability settlement document can be used for these expenses. Injury related expenses not covered by Medicare cannot be paid from the MSA Account. A medical payment account can assist in this matter.

How much can a provider charge for related services?
Many states set fee schedules that regulate the maximum reimbursement values allowable under Workers' Compensation laws for medical treatment performed by healthcare providers. For custodial accounts, Affiance will review bills according to the fee schedule used in computing your Worker's Compensation or liability settlement. Self-Administered account-holders should ensure that they review bills according to the fee schedule used in computing their Worker's Compensation or liability settlements as well.

CMS advises that the method by which the MSA amount is calculated should be the expected method of payment to the providers (i.e. if the MSA amount is determined by using Worker's Compensation rates, providers should be paid according to the fee schedule of the state where settlement was approved. If usual and customary rates were used then payment will reflect the same).

Who does the annual reporting and accounting?
Self-administered account-holders are required to submit annual accounting to CMS within 30 days of the end of each year following the creation of the MSA arrangement. Custodial account holders can rest assured that Affiance will complete the accounting on their behalf and supply a copy for their files at their request. This accounting will coincide with the account's anniversary date noted on the CMS approval letter.

What if I go back to work and get insurance?
The MSA Custodial Account funds must be used as discussed above, as long as you are a Medicare beneficiary; or may be expended for medical expenses specified in the MSA until Medicare entitlement is re-established or the MSA account is exhausted. You can return to work and obtain other insurance while still on Medicare, in certain situations. The bottom line is, if you are a Medicare beneficiary and have settled your Worker's Compensation or liability claim, then the MSA Custodial Account funds need to be used pursuant to CMS guidelines.

What if I have other coverage (i.e. Veterans Administration (VA) benefits)?
Your MSA funds must still be used to cover injury-related expenses that would otherwise be covered by Medicare. You can utilize your VA benefits for other medical care pursuant to their coverage guidelines. A MSA is still required by CMS even when VA coverage is in effect.

What if I get better?
Once funds are deposited into the MSA, the funds are required to stay in the account until they are depleted. Currently the dollar amount cannot be adjusted according to usage.

What if CMS' rules and regulations change?
Affiance Partners will use the most recent memo from CMS for guidance.