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Medicare Set-Asides & the Pitfalls of Private Insurance

What is a Medicare Set-Aside (MSA) and Why Is It Important?

When an individual seeks legal recourse after sustaining a personal injury, the process can result in the creation of a structured settlement. Settlement recipients that are 65 years of age or older will need to consider Medicare Set-Asides, or MSAs, especially when they are already receiving Medicare benefits or expect to be in the near future. In such situations it is critical that a sufficient portion of their settlements be put aside for future medical costs.

According to Federal law, Medicare is considered to be a secondary payer for medical expenses. What this means for claimants receiving settlements is that Medicare will not cover medical expenses resulting from the injury, including doctor’s appointments, laboratory tests, surgeries and medicine, before funds are used from the settlements themselves. This is very important to keep in mind when claimants begin to draw on any settlement funds that may have resulted from a lawsuit.


The Pitfalls of Private Insurance & Failing to Adhere to Medicare’s Policies

Claimants may seek to rely on private insurance to handle their post-settlement medical expenses, whether through an Affordable Care Act exchange plan or employment-based coverage, instead of Medicare itself. Rather than following Medicare’s strict guidelines on utilizing settlement funds for medical costs, they instead make use of those funds for other purposes. While such a decision might end up working out for the better, it does come with a significant amount of risk.

One of the most critical factors is that, whereas MSAs are comprehensively designed to account for known and expected medical expenses for the remainder of the claimant’s life, private insurance plans typically have a duration of only a year at most. With volatility in the private insurance market, that particular insurance plan may no longer be available at the end of those 12 months, or may have a drastically increased premium that makes it impossible to afford. Additionally, individuals may experience situations where the insurance companies deny coverage for particular procedures, tests and more.

When claimants lose their private insurance coverage or otherwise decide to transition to Medicare, past improper use of settlement funds coupled with incomplete medical expense accounting can quickly lead to precarious situations. As mentioned above, Medicare has strict guidelines regarding the use of settlement funds for medical expenses and may therefore end up denying coverage if these guidelines are not carefully followed. Without an MSA to reserve the necessary funds based on Medicare’s policies, a claimant can end up without private insurance or Medicare to cover his or her medical expenses.


Quest Settlements Provides the MSA Guidance & Services that Claimants Need

Our settlement consultants have the knowledge and experience to help attorneys and their clients properly plan out MSAs to ensure the funds for current and future medical expenses are fully taken into account and kept available as required. Having an MSA in place can provide claimants with much needed peace of mind, and help them avoid any potential pitfalls that could lead to coverage denials. We are available 24/7 to provide guidance and free case evaluations.