What is a Medicare Set-Aside?

If you have a personal injury lawsuit or workers compensation settlement, you may have to consider creating a Medicare set-aside. Medicare set-asides are very complicated. Even a lot of lawyers don’t understand exactly what they are and how they work. Thankfully, you don’t need to know everything about them. You just need to know enough about what a Medicare set-aside is so that you can protect yourself in your old age.

Basically, a Medicare set-aside is a fund you create to pay the government back for medical expenses they’ll cover years from now. If you are currently covered under Medicare, or will be one day, you need to set up this fund at the time you receive your legal settlement. Most set-asides are created as the result of a worker’s compensation settlement.

In a worker’s comp case, you are pursuing your employer for an injury that took place at work. If this injury causes you to be permanently disabled, you won’t be able to work again. So, you’ll likely end up on SSDI or SSI. This means the government will be providing you with your health insurance. If the government has to pay for medical care that was caused by a worker’s comp case, they are going to want to be reimbursed. If they know you got thousands (or millions of dollars) to cover future medical expenses, they aren’t going to be willing to pay for it.

What is the Purpose of a Medicare Set-Aside?

If you get hurt at work, you’ll file a worker’s compensation claim. If it’s determined that you are partially or totally disabled as a result of your work-related accident, you’ll receive compensation. This compensation will cover future medical expenses related to the accident. When you settle your worker’s comp case in a lump sum, a portion of the money is designated for medical expenses.

Once you go on disability, your healthcare will be covered by Medicare. The government will be responsible for paying for your medical treatment. They have no problem doing this if you become disabled. However, they’re only going to cover your general health care. They aren’t going to be willing to cover medical care that is related to an accident that you sued your employer for. Once they know you settled your case, they’re going to have one question: Why should they pay for medical expenses when you were already given the money to do so?

Knowing this, when you settle your case, you should set up something called a Medicare set-aside. This fund is created as part of your legal settlement. It’s designed to reimburse the government for medical expenses related to your accident. The government will be made aware of this fund. They will also be made aware of your settlement.

Why Do You Have to Create the Medicare Set-Aside?

Medicare is going to be aware of any medical treatment they cover. They get EOB (explanation of benefit) forms for all treatment you receive. When they see that certain procedures or appointments are related to a prior accident, they are going to exclude it from coverage. If you don’t have a set-aside fund set up, you are going to run into problems.

It’s a good idea to have an accountant help you create the account at the time of your legal settlement. Your personal injury attorney can help you do this. Your legal settlement will identify the amount of money that is being attributed to future medical expenses. This amount should be used to create your Medicare set-aside account.

If Medicare finds out that you are attempting to have them cover care that is related to your settlement, they will take action. You could be accused of committing Medicare fraud. Or, they will make you reimburse them for coverage extended. When you think about the costs of medical care, this is not something you want to do.

Your Personal Injury Attorney Will Help

When you discuss your settlement with your personal injury attorney, he’ll talk to you about a Medicare set-aside. Your attorney is very familiar with these accounts. He can partner you up with a financial planner or accountant to help create your fund. It’s important that you follow his advice. If you don’t create this account, you are creating a financial and administrative nightmare for yourself.

If you have any questions about a Medicare set-aside, contact a personal injury attorney today. They can answer any questions you may have. They can even direct you to someone who can help you create your own plan.