How We Can Help
How We Can Help
Using a Structured Settlement (annuity) to fund a Medicare Set-Aside (MSA) rather than an all-cash lump sum offers significant advantages, including an approximate 20–40% cost savings, improved cash flow, and potential for increased lifetime benefits. Structured settlements allow for a smaller initial "seed" deposit followed by annual payments, reducing the burden of immediate, total depletion required by all-cash setup
- Key Advantages of Structured Settlement Over Cash:
- Reduced Initial Cost: A structured settlement requires only the first two years of expenses plus the first surgery cost as "seed money" upfront.
- Annual Funding: The MSA is funded yearly, allowing unused funds to carry over to the next year.
- Medicare Reinstatement: If annual funds are exhausted, Medicare may resume payment for covered services for the rest of that year.
- Increased Overall Payout: Structured settlements are often preferred because they allow for better financial management and greater net value over time compared to a lump sum.
- Reduced Risk: If the injured party passes away early, the structured settlement may have a beneficiary provision, whereas an all-cash lump sum that is not fully spent may be forfeited
- Downsides to Cash Payment:
- Total Exhaustion Requirement: The entire amount must be spent before Medicare pays for any injury-related treatment.
- Lower Net Value: It often leads to less money available for the claimant in the long run.
- High Upfront Capital: It requires all funds available immediately, which can be inefficient for a claimant
We can also refer you to one of the great MSA Allocation Companies that we work with, for the purpose of preparing the MSA Allocation Report. These companies can also advise you as to if an MSA may or may not be needed in your specific case.
In the mean-time, these are some things to keep in mind...
In the mean-time, these are some things to keep in mind...
The Medicare Secondary Payer Act contains regulations that prohibit Medicare from making a payment where this is a primary payer involved. The regulations require that Medicare must be considered in any settlement when the injured person might rely on Medicare to cover any future medical costs related to the injury.
A Medicare Set-Aside is a bank account, set up to administer a Medicare Set-Aside allocation, used to pay the injured party’s injury related, Medicare covered expenses. It can be funded with cash or annuities. It is the preferred and recommended method of protecting Medicare’s interest as a secondary payer in settlements as required by the Medicare Secondary Payer statutes, and related memo’s.
The Medicare Secondary Payer Act contains regulations that prohibit Medicare from making a payment where this is a primary payer involved. The regulations require that Medicare must be considered in any settlement when the injured person might rely on Medicare to cover any future medical costs related to the injury.
A Medicare Set-Aside is a bank account, set up to administer a Medicare Set-Aside allocation, used to pay the injured party’s injury related, Medicare covered expenses. It can be funded with cash or annuities. It is the preferred and recommended method of protecting Medicare’s interest as a secondary payer in settlements as required by the Medicare Secondary Payer statutes, and related memo’s.
MSA allocation report
- A Medicare Set-Aside (MSA) Allocation is a detailed report that recommends how much money out of the settlement needs to be "set aside" to satisfy the Medicare Secondary Payer (MSP) Statute of 1980.
- The MSA allocation will break down all future medical and prescription drug expenses for the life expectancy of the claimant that would normally be covered and not covered by Medicare. It is based upon an analysis of medical reports from the past several years.
- An MSA Allocation Report is also a 3rd party look at future medical treatment which can aid in setting reserves.
The Centers for Medicare and Medicaid Services (CMS) will review and approve MSAs under certain circumstances (when closing Medical to "Qualified Individuals"
- Class 1 - If the claimant is currently a Medicare beneficiary and the total settlement amount exceeds $25,000; or
- Class 2 – If the claimant is ‘reasonably expected’ to be a Medicare beneficiary and the total settlement value exceeds $250,000.
CMS defined "reasonable expectation" of Medicare enrollment within 30 months.
- The individual has applied for Social Security Disability Benefits;
- The individual has been denied Social Security Disability Benefits but anticipated appealing the decision;
- The individual is in the process of appealing and/or re-filing for Social Security Disability Benefits;
- The individual is 62.5 years or
- The individual has an End Stage Renal Disease (ESRD) condition but does not yet qualify for Medicare based upon ESRD.
Important - The above-listed criteria are only for when CMS will review a MSA. These criteria are not for when a MSA is needed in a case and when it is not.
For more information please contact Centers for Medicare and Medicaid Services (CMS)
