What Is A Medicare “Set-Aside” Trust? Do I Need One?

If a person is injured or contracts a disease while in the scope of their employment, they may file for workers’ compensation benefits, or in some cases, file a lawsuit against the person or entity that caused their injuries. If it becomes necessary, Medicare will pay those bills. However, if Medicare pays expenses that by rights should have been covered by workers’ compensation, it will often hold that person liable for the expenditure. A Medicare “set-aside” trust is a mechanism to allocate current funds for potential future expenses, so that Medicare does not have to foot the bill unnecessarily.

If someone has been injured on the job and received workers’ compensation benefits, or if they have sued and prevailed against a negligent defendant, a Medicare set-aside trust can be helpful in ensuring that their medical bills are always covered while hopefully avoiding having to reimburse the program for later expenses. Trusts are “fiduciary arrangements” where assets are held “in trust” for a beneficiary or beneficiaries, and cannot be seized or sold without the consent of the trustee. Also, set aside trusts are typically “self-administered” by the injured worker following approval or administered by a professional entity depending on the circumstances involved with the settlement.

The reason why assets need to be held in trust as opposed to simply having money in a standard bank account is that Medicare has the right to insist on reimbursement in some situations. In 1980, Congress passed legislation making Medicare the secondary payor to most private health insurance plans, meaning that if someone who has insurance is injured, Medicare will only pay bills if their insurer refuses to do so. If Medicare has to foot a bill that it should not statutorily have to pay, it has the right to seek repayment at a later point – but assets held in trust cannot be touched for purposes of satisfying that debt.

So, for example, if a worker sustains a serious injury on the job, and they receive a significant workers’ compensation benefits package, it may be to their advantage to place a high percentage of that money into a “set-aside” trust, particularly if they have a “reasonable expectation” of joining Medicare up to 30 months after their settlement. Later on, when they are on Medicare, they can pay bills stemming from the prior injury out of their own pocket instead of incurring liability by expecting Medicare to do so.

Call A Connecticut Workers’ Compensation Attorney

While Medicare set-aside trusts can become quite complex, they can save you significant amounts of money in the long run. If you have questions or concerns about creating one for yourself or a loved one after a workers’ compensation settlement, a Stratford workers’ compensation attorney from the Morizio Law Firm may be able to assist you in getting them answered. Call our offices today at 475-338-3505 for a free consultation.

Sources:

cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Workers-Compensation-Medicare-Set-Aside-Arrangements/WCMSA-Overview

cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Coordination-of-Benefits-and-Recovery-Overview/Medicare-Secondary-Payer/Medicare-Secondary-Paye