Medicare and workers' compensation: Essential information to understand

Medicare and workers' compensation: Essential information to understand

Navigating the world of workers' compensation and Medicare can be a tricky business. Here's a lowdown on what you need to know to stay on the right side of things.

First off, workers' comp is insurance that kicks in when you've got job-related injuries or illnesses. The Office of Workers' Compensation Programs (OWCP) under the Department of Labor handles this for federal employees, their families, and selected entities.

Now, if you're already on Medicare or will be soon, understanding how workers' compensation affects Medicare's coverage is crucial. This will help you avoid any problems with medical costs for workplace-related injuries.

So, here's what happens when you get a workers' comp settlement: Under Medicare's secondary payer policy, workers' comp should cover any treatment for a work-related injury before Medicare steps in. But, if immediate expenses arise before the settlement, Medicare might pay first and launch a recovery process managed by the Benefits Coordination & Recovery Center (BCRC). To avoid this, the Centers for Medicare & Medicaid Services (CMS) typically keeps an eye on the amount you get from workers' comp for injury- or illness-related medical care. In some cases, they may request a workers' compensation Medicare set-aside arrangement (WCMSA) for these funds. Medicare will only cover the care after all the money in the WCMSA is spent.

Now, not all settlements require reporting to Medicare. Workers' comp should submit a total payment obligation to the claimant (TPOC) to CMS if the settlement is $25,000 or more and the person is enrolled in Medicare, or if the person will qualify for Medicare within 30 months of the settlement date, and the settlement amount is $250,000 or more. Additionally, you must report if you file a liability or no-fault insurance claim.

Here's a break-down of the steps you need to follow to ensure everything's above board:

1. Master the Medicare Set-Aside (MSA): This part of the settlement is reserved for future medical care. Properly funding and documenting the MSA ensures Medicare's interests are protected.
2. Section 111 Reporting: As of April 4, 2025, all full and final workers' compensation settlements involving Medicare beneficiaries must be reported to CMS through the Section 111 reporting process. This includes reporting the settlement amount, MSA allocation, and funding mechanisms (lump sum or annuity).
3. Notify CMS: Informing CMS about the workers' compensation arrangement is crucial to avoid claim denials and reimbursement obligations. This involves submitting the TPOC to CMS.
4. BCRC: In cases where Medicare has already paid for related medical expenses, the BCRC manages the recovery process. Reporting the settlement helps avoid this process.
5. Compliance and Documentation: Proactive compliance and proper documentation of the MSA and settlement details are necessary to avoid penalties.

Following these steps will ensure that your settlement is properly reported, helping maintain Medicare coverage and preventing reimbursement obligations.

For more resources to help navigate this complex world, visit our Medicare hub. Remember, knowledge is power!

1. Understanding how workers' compensation affects Medicare coverage is essential for avoiding issues with medical costs related to workplace injuries.
2. Workers' compensation should cover treatment for work-related injuries before Medicare steps in, according to Medicare's secondary payer policy.
3. If a workers' comp settlement is $25,000 or more for a person on Medicare, or if the person will be on Medicare within 30 months of the settlement date and the settlement amount is $250,000 or more, it must be reported to CMS.
4. Properly funding and documenting the Medicare Set-Aside (MSA) ensures Medicare's interests are protected in the settlement.
5. Informing CMS about the workers' compensation arrangement is crucial to avoid claim denials and reimbursement obligations, involving the submission of the total payment obligation to the claimant (TPOC) to CMS.
6. Compliance with rules and proper documentation of the MSA and settlement details help avoid penalties and ensure Medicare coverage is maintained.

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