Understanding Interplay between Workers' Compensation and Medicare Benefits: Essential Information
Navigating workers' compensation and Medicare can be tricky, especially when it comes to settlements. Here's a breakdown of how it works:
WHY REPORT WORKERS' COMPENSATION SETTLEMENTS TO MEDICARE?
To prevent future claim rejections and reimbursement obligations, it's essential to inform Medicare about workers' compensation agreements. If you're currently on Medicare or will soon be, understanding how workers' compensation can impact Medicare coverage is crucial.
HOW DO WORKERS' COMP SETTLEMENTS AFFECT MEDICARE?
Under Medicare's secondary payer policy, workers' compensation must be the primary payer for any treatment related to a work-related injury. If immediate medical expenses arise before you receive your workers' compensation settlement, Medicare may pay first and initiate a recovery process. To avoid this process, the Centers for Medicare & Medicaid Services (CMS) often monitors the amount received from workers' compensation for injury or illness-related medical care.
In some cases, Medicare may ask for the establishment of a workers' compensation Medicare set-aside arrangement (WCMSA) for these funds. Medicare will only cover care after all the money in the WCMSA has been spent.
WHO NEEDS TO REPORT TO MEDICARE?
- If you're already on Medicare, based on age or Social Security Disability Insurance, and your settlement is $25,000 or more, you need to submit a Total Payment Obligation to the Claimant (TPOC) to CMS.
- If you're not currently on Medicare but will qualify within 30 months of the settlement date, and the settlement amount is $250,000 or more, you also need to submit a TPOC.
- You must also report if you file a liability or no-fault insurance claim.
KEY CHANGES IN 2025
Starting July 17, 2025, CMS will implement changes to the $0 WCMSA policy, affecting how zero-dollar WCMSAs are handled and reported.
In summary, understanding the relationship between workers' compensation and Medicare is crucial to avoid complications with medical costs for work-related injuries or illnesses. Always ensure to report settlements to Medicare when necessary, and be aware of the changes that will take effect in 2025.
For more resources on navigating medical insurance, visit our Medicare hub.
- Medicare's secondary payer policy dictates that workers' compensation must be the primary payer for treatments related to work-related injuries, as failing to do so can lead to future claim rejections and reimbursement obligations.
- In some cases, Medicare may require the establishment of a workers' compensation Medicare set-aside arrangement (WCMSA) for funds received from workers' compensation for injury or illness-related medical care to prevent immediate payment and subsequent recovery processes.
- If you're already on Medicare or will soon be and your workers' compensation settlement is $25,000 or more, or if you're not currently on Medicare but will qualify within 30 months of the settlement date and the settlement amount is $250,000 or more, you must submit a Total Payment Obligation to the Claimant (TPOC) to the Centers for Medicare & Medicaid Services (CMS).
- As of July 17, 2025, CMS will implement changes to the $0 WCMSA policy, affecting how zero-dollar WCMSAs are handled and reported. This points to the necessity of acquiring knowledge about the evolving relationship between workers' compensation and Medicare to navigate medical costs for work-related injuries or illnesses effectively.
