How Much Does It Cost to Have a Medicare Set-Aside Account Professionally Administered?
Most companies in the Medicare Set-Aside (MSA) administration business (and there are less than 10 in the country) use two methods of calculation depending on how the MSA will be funded. If it is a lump sum amount, the fee is usually equal to 20% of the total MSA amount. If the settlement includes annual annuity payments, the formula equals (Total MSA Amount) * (20%) / (Rated Age Life Expectancy).
So for a lump sum MSA of $20,000, the onetime fee would be $4,000. A claimant with a $200,000 MSA and a 30 year life expectancy would have an administration fee of $1,333 per year. Based on current annuity rates, the cost would be approximately $21,000 to fund that payment for the duration of a claimant’s life expectancy. Most firms charge a minimum of $500 per year and a maximum of $2,000. Some also include a “set-up fee” of $2,000.
These numbers may shock you, but they really shouldn’t when you consider what an administration company actually has to do for the money and, more importantly, for how long.
Take the example of a 35 year old paraplegic. A trust administrator must determine the services related to the workers’ compensation claim, ensure they are Medicare covered items, re-price to the state fee schedule if needed, pay the providers and send a report to Medicare each year. Additionally, they have to field pre-settlement phone calls from the attorneys and claims adjusters. Post settlement, they must be available to speak with the claimant and/or their attorney as well as any medical providers unfamiliar with how to bill an MSA account. This can go on for 40+ years! Because of Medicare’s guidelines, the administration fees must be paid up-front, usually by the carrier as part of a settlement.
The good firms should have a full cost containment program for Durable Medical Equipment (DME) and Pharmacy Benefit Management (PBM) as well as an attorney, nurse case manager, and financial professional on staff to handle specific issues as they arise. Plus, they will have a pleasant “bedside manner” with their clients since an unhappy claimant means additional calls back to the adjuster or attorney years after a case has been concluded.
For more information about MEDVAL’s post settlement trust administration call 888-SET-ASIDE and ask to speak with Laura Johnson, MEDVAL’s trust operations manager.
MEDVAL 1-888-SET-ASIDE (1-888-738-2743)
Medicare Set-Aside Allocation/Arrangement Recommendations
Submissions to Centers for Medicare and Medicaid Services
Pharmacy Benefit Management
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