The Importance of Notifying Medicare About Workers' Compensation Settlements
Medicare and Workers' Compensation: Essential Facts to Understand
Emergency notification to Medicare is crucial when dealing with workers' compensation arrangements. Failure to do so may lead to claim denials and the necessity to reimburse Medicare.
Workers' compensation serves as an insurance policy for employees who have sustained work-related injuries or illnesses. The Office of Workers' Compensation Programs (OWCP), under the auspices of the Department of Labor, is tasked with administering this benefit to federal employees, their families, and select other entities.
Individuals enrolled in Medicare or soon to qualify for it should be well-informed about the potential impact of their workers' compensation benefits on Medicare's coverage of their medical expenses related to occupational injuries or illnesses. This knowledge is vital to prevent complications in managing medical costs resulting from workplace accidents or illnesses.
Understanding the Role of Workers' Compensation Settlements in Medicare
Under Medicare's Secondary Payer policy, workers' compensation is obligated to cover the cost of treatment for work-related injuries before Medicare does. Nevertheless, if immediate medical costs arise before the recipient receives their workers' compensation settlement, Medicare may pay first and initiate a recovery process managed by the Benefits Coordination & Recovery Center (BCRC).
To avoid this recovery process and prevent future claim rejections and reimbursement obligations, the Centers for Medicare & Medicaid Services (CMS) generally monitors the amount a person receives from workers' compensation for injury- or illness-related medical care. In certain cases, Medicare may require the establishment of a Workers' Compensation Medicare Set-Aside Arrangement (WCMSA) for these funds. TheWCMSA must be exhausted before Medicare covers any additional care.
Reporting Requirements for Workers' Compensation Settlements
Workers' compensation is required to submit a Total Payment Obligation to the Claimant (TPOC) report to CMS to ensure Medicare covers the appropriate share of a person's medical expenses when either:
- The individual is enrolled in Medicare due to age or being a Social Security Disability Insurance recipient, and the settlement exceeds $25,000.
- The person is not yet enrolled in Medicare but will become eligible within 30 months of the settlement date, and the settlement amount is $250,000 or more.
In addition to workers' comp, an individual must report to Medicare if they file a liability or no-fault insurance claim.
Frequently Asked Questions
Questions pertaining to Medicare can be addressed by phone at 800-MEDICARE (800-633-4227, TTY 877-486-2048). During specific hours, a live chat is also available on Medicare.gov. For inquiries related to the Medicare recovery process, individuals can contact the BCRC at 855-798-2627 (TTY 855-797-2627).
A Medicare set-aside is voluntary, but it is essential if the workers' compensation settlement surpasses $25,000 for a Medicare beneficiary or $250,000 if the individual will become eligible for Medicare within 30 months.
It is prohibited to utilize the money in a Medicare set-aside arrangement for any purpose other than the one for which it is designated. Misuse of the funds can lead to claim denials and the necessity to reimburse Medicare.
Key Learning Points
- Workers' compensation is an insurance policy for job-related injuries or illnesses for federal employees and select groups.
- Those enrolled in Medicare or soon to be eligible should educate themselves on the implications of workers' compensation on their Medicare coverage to evade complications with medical expenses.
- Notification of workers' compensation agreements to Medicare is critical in preventing future claim rejections and reimbursement obligations.
Additional Resources
For further guidance in navigating the complex world of medical insurance, visit our Medicare hub.
In April 2025, Section 111 reporting requirements will be updated. Workers' compensation carriers and Responsible Reporting Entities (RREs) will be required to report specific data regarding settlements with Medicare beneficiaries through Medicare’s Section 111 reporting process.
For settlements involving Medicare beneficiaries and total amounts over $25,000, CMS will review the proposed WCMSA allocation to ensure it is sufficient to cover future costs.
- The Centers for Medicare & Medicaid Services (CMS) require Workers' Compensation to submit a Total Payment Obligation to the Claimant (TPOC) report when an individual is enrolled in Medicare due to age or being a Social Security Disability Insurance recipient, and the settlement exceeds $25,000.
- Medicare Set-Aside Arrangements (WCMSA) may be required by Medicare if the worker's compensation settlement surpasses $25,000 for a Medicare beneficiary or $250,000 if the individual will become eligible for Medicare within 30 months.
- The establishment of a Workers' Compensation Medicare Set-Aside Arrangement (WCMSA) is essential to avoid Medicare's recovery process, prevent future claim rejections, and reimbursement obligations.
- In the future, Workers' Compensation carriers and Responsible Reporting Entities (RREs) will be required to report specific data regarding settlements with Medicare beneficiaries through Medicare’s Section 111 reporting process, as Section 111 reporting requirements will be updated in April 2025.
