Ask Jen

Medicare Set-Aside Blog on March 21, 2011
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“Hello Jen:   I represent a client injured in an auto accident at age 59.  She is not Medicare eligible and has been released from two physicians who have told her, “It is what it is.”  Mediation resulted in tentative settlement until defendants said plaintiff’s must fund the “Medicare Set Aside.”  They are of the opinion that there must be a formal insurance-type program in place in the event my client needs medical care in the future while covered under Medicare and that Medicare can somehow relate back to the accident.  I find this hard to believe.  Can you provide information?  In particular, the cite to MSP law/regulation that requires this?”

MSP in essence says that Medicare is prohibited from paying once a primary payer has been identified; however there are circumstances where Medicare may make a conditional payment, the condition being a statutory right to reimbursement from the primary payer or anyone in receipt of funds from the settlement. Because the MSP does not provide a means of terminating this exposure, many defendants are fearful that they may be placed in a position of being forced to pay for medical care long after a claim is settled. An MSA is nothing more that a means to prevent that from happening. If defendant makes an allocation for an MSA, the plaintiff would essentially have a deductible she would have to meet before Medicare would even entertain making related payments in the future. So in your case, defendant is protected because it made an allocation for future medicals and your client is protected because she received funds for future treatment whether she needs it or not. If she is certain she doesn’t need any treatment that could possibly be found to be related, then that money is hers to do with as she pleases so long as she understands if somehow she was wrong, that she will need to replace the funds and use them for treatment before Medicare will ever pay again for related treatment.

With regard to your statement that two physicians stated “it is what it is” that does not read that she doesn’t require future treatment, just sounds like she’s at MMI. If she’s healed and no treatment is foreseeable, then you might have a zero MSA anyway. While she’s not entitled to Medicare today, is she disabled enough that SSDI is a possibility? Is the condition permanent and treatment in six years already foreseeable?  There are so many reasons a defendant could want a set-aside, but no where will you find a law or reg that affirmatively states that need.

Hope that helps,