Medicare and Workers' Compensation Interactions: Key Facts Explained
Navigating Medicare and Workers' Compensation: A Comprehensive Guide
Are you unsure about what to do when dealing with a workers' compensation arrangement and Medicare? Here's the lowdown on this essential knowledge to avoid claim denials and hefty reimbursements.
Workers' compensation is a lifesaver for people who suffer from job-related injuries or illnesses, especially for federal employees, their families, and specific entities. The Office of Workers' Compensation Programs (OWCP) under the Department of Labor is responsible for this benefit.
Individuals currently enrolled in Medicare or who are soon to qualify should be aware of the potential implications that workers' compensation benefits may have on Medicare's coverage of their medical claims. This vital understanding helps avoid complications with medical costs related to work-related injuries.
But exactly, how does a workers' comp settlement affect Medicare?
Under Medicare's secondary payer policy, workers' compensation should be the primary payer for any work-related injury treatment. However, if immediate medical expenses arise prior to receiving the workers' compensation settlement, Medicare may pay first and initiate a recovery process managed by the Benefits Coordination & Recovery Center (BCRC).
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 to avoid a recovery process. In some cases, Medicare may ask for the establishment of a workers' compensation Medicare set-aside arrangement (WCMSA). Medicare will only cover care after all the money in the WCMSA has been depleted.
What settlements must be reported to Medicare?
Workers' compensation should submit a Total Payment Obligation to the Claimant (TPOC) to CMS to ensure Medicare covers the appropriate portion of a person's medical expenses. This TPOC is crucial if a person is already enrolled in Medicare based on their age or receiving Social Security Disability Insurance, and the settlement is $25,000 or more. TPOCs are also necessary 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.
Additionally, if a person files a liability or no-fault insurance claim, they must report it to Medicare.
Questions?
You can reach out to Medicare by phone at 800-MEDICARE (800-633-4227, TTY 877-486-2048) during certain hours, or via live chat on Medicare.gov. For questions about the Medicare recovery process, contact the BCRC at 855-798-2627 (TTY 855-797-2627).
Important Notes:
- A Medicare set-aside is voluntary. However, if a Medicare beneficiary wants to set one up, their workers' compensation settlement must be over $25,000. Alternatively, it must be over $250,000 if they are eligible for Medicare within 30 months.
- It is prohibited to use the money in a Medicare set-aside arrangement (WCMSA) for any purpose other than the one for which it is designated. Misusing the money can result in claim denials and the need to reimburse Medicare.
In-depth Resources:
Under new rules effective April 4, 2025, all full and final workers' compensation settlements involving Medicare beneficiaries must be reported to CMS via the Section 111 reporting process, regardless of whether CMS approval of a Medicare Set-Aside (MSA) is requested or not. This reporting is required for insurance carriers, self-insured employers, and third-party administrators (TPAs).
In cases where future medical expenses related to the injury are expected, Medicare may require the creation of a Workers' Compensation Medicare Set-Aside (WCMSA).
Remember to comply with these reporting requirements to avoid civil monetary penalties against carriers or employers and potential Medicare denial of medical payment coverage for future treatments related to the injury.
The Bottom Line:
Workers' compensation is crucial for federal employees, and it's essential to be aware of its impact on Medicare coverage to avoid issues with medical expenses. Properly informing Medicare about workers' compensation arrangements helps prevent future claim rejections and reimbursement obligations.
For more resources to help navigate the complex world of medical insurance, visit our Medicare hub.
[1] Rules: Medicare Secondary Payer (MSP) Reporting and Educational Initiatives. (n.d.). Retrieved April 13, 2022, from https://www.cms.gov/medicare/coordination-of-benefits-and-recovery/cms-recovery- audit-contractor-charter-alert/bcdmohca-pgeady58qnm.html
[2] Workers’ compensation Medicare set-asides: A guide for vehicle collisions. (n.d.). Retrieved April 13, 2022, from https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/workerscomp
[3] Janssen, M. (2021, January 21). FAQ - What Is Workers' Compensation and How Does It Affect Medicare? Retrieved April 13, 2022, from https://hbslaw.com/workers-compensation-faq/
[4] Covaleski, C. F., Williams, M. A., Wolfson, M. R., Simon, R. B., Perales, E. J., & McEleney, T. J. (2007). The use of Medicare set‐asides and settlements in workers' compensation: A national survey of stakeholders. Journal of Occupational and Environmental Medicine, 49(7), 678-683. doi: 10.1097/JOM.0b013e31802f9632
[5] Vicari, J. (2021, January 28). What Is the Total Payment Obligation to the Claimant (TPOC)? Retrieved April 13, 2022, from https://www.medicareinteractive.org/get-answers/benefits-administation-and-enrollment/appeals-and-complaints/what-is-the-total-payment-obligation-to-the-claimant-tpoctopic307030.aspx
- Understanding the interaction between workers' comp settlements and Medicare is crucial to ensure proper medical expense coverage, particularly for individuals enrolled in or soon to qualify for Medicare.
- Medicare's secondary payer policy dictates that workers' compensation should be the primary payer for any work-related injury treatments, but Medicare may pay first if immediate medical expenses arise before the workers' comp settlement.
- Workers' compensation settlements over $25,000 (or $250,000 if the beneficiary will qualify for Medicare within 30 months) should be reported to Medicare via the Total Payment Obligation to the Claimant (TPOC) to avoid complications with medical costs.
- In some cases, Medicare may require the creation of a Workers' Compensation Medicare Set-Aside arrangement (WCMSA) to cover future medical expenses related to the injury. Misusing WCMSA funds can lead to claim denials and reimbursement obligations.
