Most attorneys know that per Medicare Secondary Payer provisions, Medicare is the secondary payer for items and services that should be paid for by other health insurance or coverage, such as liability insurance or workers’ compensation.
A Medicare Set-Aside (MSA) is Medicare’s preferred vehicle for ensuring settlement funds are properly reserved to pay for future medical care—but did you know that an MSA funding option exists that can actually preserve more of your client’s settlement proceeds?
Choosing the Best Funding Option
Claimants who currently receive and those who expect to receive Medicare benefits in the near future must consider Medicare’s interests when it comes to their settlement proceeds. If Medicare pays for any medical costs that should have otherwise been paid for out of the settlement proceeds, eligibility may be jeopardized.
There are two main funding options: a lump sum or a structured settlement. If your client decides to fund their MSA with a lump sum, then the MSA funds must be exhausted in their entirety before Medicare will resume as the primary payer.
However, if a structured settlement is utilized, your client can save money over the long term. Here’s how it works:
- An initial deposit of “seed money” is used to fund the MSA. The amount of the seed deposit totals the first surgical procedure or replacement and two years of annual payments.
- The structured settlement then funds the MSA with annual deposits. Any funds remaining in the MSA at the end of the annual period are carried forward to the next period and added to the deposit for that period.
Here’s the best part: if a structured settlement is used to fund the MSA and the funds are exhausted within an annual period, Medicare will pay medical costs for the remainder of that period.
Once that annual period ends, the structured settlement makes the next scheduled deposit, and medical costs are once again paid for out of the MSA.
Contact Sage Settlement Consulting Today
Sage Settlement Consulting works with industry leaders on all aspects of Medicare Set-Asides, including allocation, funding, and administration. To learn more, contact us today.