Navigating Interplay between Workers' Compensation and Medicare: Crucial Insights
Navigating the intersection of workers' compensation and Medicare is a must for those at risk. Failure to do so could lead to denied claims and potential reimbursements.
Workers' compensation functions as an insurance program for individuals who sustain work-related injuries or illnesses. The Office of Workers' Compensation Programs (OWCP) under the Department of Labor oversees this benefit, which extends to federal employees, their families, and select other entities.
If you're enrolled in Medicare or anticipate joining soon, it's essential to comprehend how workers' compensation may interact with Medicare's coverage of your medical claims for workplace-related mishaps. This knowledge ensures you avoid complications regarding medical expenses.
The Impact of a Workers' Compensation Settlement on Medicare
Under Medicare's secondary payer policy, workers' compensation must finance any treatment for a work-related injury before Medicare steps in.
In emergency situations, Medicare might initially cover the costs, but it will subsequently initiate a recovery process managed by the Benefits Coordination & Recovery Center (BCRC). To avoid this procedure and its intricacies, the Centers for Medicare & Medicaid Services (CMS) typically keeps tabs on the amount an individual receives from workers' compensation for injury- or illness-related medical care.
In specific instances, Medicare may ask for the implementation of a workers' compensation Medicare set-aside arrangement (WCMSA) for these funds. Medicare coverage will only be extended once the WCMSA funds have been depleted.
Settlements Requiring Reporting to Medicare
Insurance providers must submit a Total Payment Obligation to the Claimant (TPOC) to CMS to ensure Medicare covers the suitable portion of an individual's medical expenses. This TPOC signifies the whole amount of workers' compensation allotted to the person or on their behalf.
Submitting a TPOC is necessary if the individual is enrolled in Medicare based on their age or Social Security Disability Insurance (SSDI) eligibility, and the settlement surpasses $25,000.
In addition, TPOCs are required if the person is not yet enrolled in Medicare but will become eligible within 30 months of the settlement date, and the settlement exceeds $250,000. A person should also report to Medicare if they file a liability or no-fault insurance claim.
Frequently Asked Questions
To address any queries, a person can contact Medicare via phone at 800-MEDICARE (800-633-4227, TTY 877-486-2048). During specific hours, live chat is also available on Medicare.gov. Questions regarding the Medicare recovery process can be directed to the BCRC at 855-798-2627 (TTY 855-797-2627).
A Medicare set-aside is voluntary. However, if a Medicare beneficiary wants to set one up, their workers' compensation settlement must exceed $25,000 or $250,000, depending on their anticipated Medicare eligibility. Misusing funds from a Medicare set-aside arrangement can lead to claim denials and the need to reimburse Medicare.
Resources: Visit our Medicare hub for more resources to help navigate the world of medical insurance.
Additional Insights (15% enrichment data)
As of April 4, 2025, the reporting process for workers' compensation settlements involving Medicare beneficiaries will see changes. These updates impact how settlements above certain amounts are reported in relation to Medicare eligibility.
Under the revised rules, all full and final workers' compensation settlements involving Medicare beneficiaries must be reported to Medicare through the Section 111 reporting process, regardless of the settlement amount. This mandates that even settlements below $25,000 or above $250,000, if they involve a Medicare beneficiary, must be reported if the claimant is a Medicare beneficiary.
The reporting should include comprehensive information, such as the total settlement amount, the Medicare Set-Aside allocation (if applicable), and the funding mechanism (whether lump sum or structured annuity). Over 200 data fields are required in the submission, including injury descriptions, ICD codes, parties involved, and claimant personal data.
A Medicare Set-Aside (MSA) allocates a portion of the settlement for future medical expenses related to the work injury that Medicare would otherwise cover. While CMS doesn't mandate an MSA in every case, it is a popular method to safeguard Medicare's interests. When used, the injured worker must utilize the MSA funds before Medicare will provide coverage for related medical treatment going forward. If the MSA funds are exhausted, Medicare becomes the primary payer once again.
Failure to report accurately or timely can lead to civil monetary penalties—up to $1,000 per day, per claim—and may expose carriers, employers, or third-party administrators to litigation risks if Medicare denies payment for future treatment related to the injury. Medicare can also place a marker in their system upon receiving the settlement data, which helps them monitor and potentially deny payments for treatment related to the injury unless the MSA funds have been appropriately used first.
- The Centers for Medicare & Medicaid Services (CMS) may keep track of the amount an individual receives from workers' compensation for injury- or illness-related medical care, assessing whether a Medicare set-aside arrangement (WCMSA) should be implemented.
- If an individual receives a workers' compensation settlement that is above $25,000 but not yet enrolled in Medicare, they should submit a Total Payment Obligation to the Claimant (TPOC) to Medicare to ensure Medicare covers the suitable portion of their medical expenses.
- As of April 4, 2025, changes to the reporting process for workers' compensation settlements involving Medicare beneficiaries will be implemented. These updates impact how all full and final workers' compensation settlements, regardless of the settlement amount, should be reported to Medicare through the Section 111 reporting process if the claimant is a Medicare beneficiary.
