Medicare and Workers' Compensation Interactions: Crucial Information
Understanding the Importance of Notifying Medicare about Workers' Compensation Arrangements
It is crucial for individuals involved in workers' compensation agreements to notify Medicare to avoid potential claim denials and reimbursement obligations.
Workers' compensation provides insurance coverage for federal employees and certain other groups who experience job-related injuries or illnesses. The Office of Workers' Compensation Programs (OWCP) under the Department of Labor handles this benefit, which also applies to the families of federal employees and certain other entities [1].
Individuals currently enrolled in Medicare or soon to be eligible need to understand how their workers' compensation benefits might impact Medicare's coverage of their medical claims related to workplace injuries or illnesses. This knowledge is essential to prevent complications with medical costs [1].
Worker's Compensation Settlements and Medicare Coverage
Under Medicare's secondary payer policy, workers' compensation must cover any treatment a person receives for a work-related injury before Medicare steps in [1]. If immediate medical expenses arise before the individual receives their workers' compensation settlement, Medicare may initially pay for the treatment and initiate a recovery process managed by the Benefits Coordination & Recovery Center (BCRC) [1].
To avoid a recovery process, the Centers for Medicare & Medicaid Services (CMS) generally monitors the amount a person receives from workers' compensation for their injury or illness-related medical care [1]. In some cases, Medicare may require a workers' compensation Medicare Set-Aside Arrangement (WCMSA) for these funds [1]. Medicare will only cover the care after all the money in the WCMSA has been exhausted [1].
What Settlements Need to be Reported to Medicare?
Workers' compensation is required to submit a Total Payment Obligation to the Claimant (TPOC) to CMS to ensure that Medicare covers the appropriate portion of the person's medical expenses [2][3]. This represents the total amount of workers' compensation owed to the person or on their behalf [2][3].
TPOC submission is necessary if a person is already enrolled in Medicare based on their age or Social Security Disability Insurance, and the settlement is $25,000 or more [2]. TPOCs are also required if the person is not currently enrolled in Medicare but will qualify for the program within 30 months of the settlement date, and the settlement amount is $250,000 or more [2]. Additionally, if a person files a liability or no-fault insurance claim, it must be reported to Medicare [2].
Key Points about Reporting and Settlement Amounts
- Reporting of workers' compensation settlements is required when the claimant is a Medicare beneficiary, and the settlement has the effect of releasing medical expenses that would otherwise be Medicare-covered [2][5].
- As of April 4, 2025, CMS requires reporting of Workers’ Compensation Medicare Set-Aside Arrangements (WCMSAs) as part of the TPOC reporting process [2][5].
- The threshold for mandatory submission of a WCMSA to CMS for approval includes:
- Settlements with Medicare beneficiaries where the total settlement amount is greater than $25,000, or
- If the claimant has a reasonable expectation of Medicare enrollment within 30 months of the settlement date and the anticipated total settlement amount for future medical expenses and disability or lost wages exceeds $250,000 [4].
Medicare Resources
For more resources to help navigate the complex world of medical insurance, visit our Medicare hub [6].
References:[1] https://www.medicare.gov/Pubs/pdf/10164-Medicare-Workers-Comp.pdf[2] https://www.chungasophis.com/blog/medicare-set-aside-arrangements-for-federal-employees/[3] https://www.hhs.gov/oig/program-responsibilities/section-111/sec111-domestic.html[4] https://www.cms.gov/Medicare/Medicare-General-Information/WCMSAFactsheet.html[5] https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM13193.pdf[6] Your site's Medicare hub link here.
- To prevent potential claim denials and reimbursement obligations, health systems should notify Medicare about Workers' Compensation arrangements for federal employees and certain groups who experience job-related injuries or illnesses.
- Under Medicare's secondary payer policy, Medicare will only cover medical expenses related to workplace injuries or illnesses after workers' compensation has exhausted its funds, such as in a Workers' Compensation Medicare Set-Aside Arrangement (WCMSA).
- Workplace-wellness programs, fitness and exercise, therapies and treatments, and nutrition play a crucial role in reducing job-related injuries and illnesses, thereby potentially reducing the need for Workers' Compensation and the creation of WCMSAs.
- If a Medicare beneficiary receives a workers' compensation settlement of $25,000 or more, or if the claimant has a reasonable expectation of Medicare enrollment within 30 months of the settlement date and the anticipated total settlement amount for future medical expenses exceeds $250,000, the Total Payment Obligation to the Claimant (TPOC) must be reported to Medicare.
- To ensure that Medicare covers the appropriate portion of medical expenses for individuals enrolled in Medicare or soon to be eligible, it is essential to understand science-based health-and-wellness strategies to prevent and manage job-related injuries and illnesses, and to report workers' compensation settlements correctly.
