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How to Save Big Money on Medicare Set-Asides

How to Save Big Money on Medicare Set-Asides
Sage Settlement Consulting

If your client receives Medicare benefits or expects to be on Medicare in the near future, then you’ve likely explored the need for a Medicare Set-Aside. Funding a Medicare Set-Aside with a structured settlement annuity instead of a cash lump sum may provide significant savings—here’s how.

Funding Option #1: Cash Lump Sum

If your client chooses to fund a Medicare Set-Aside (MSA) with a lump sum cash payment, then the entire MSA must be exhausted before Medicare will resume as the primary payer.

Funding Option #2: Cash + Structured Settlement Annuity

If your client chooses the structured settlement annuity option, here’s how it works:

  • A smaller lump sum is used as seed money to establish the MSA. The lump sum is equivalent to the amount of the first surgical procedure or replacement, plus two years’ worth of annual payments.
  • The MSA is then replenished with annual structured settlement annuity payments. Any funds remaining at the end of an annual period are carried over and added to the deposit for the next period.

How does the cash + structured settlement annuity option save money?

Let’s say that nine months into the annual period, your client’s MSA funds for that period have been exhausted. If that happens, Medicare will pick up the medical costs for the remaining three months of the annual period. The structured settlement annuity will then make the next annual deposit and the MSA will once again begin paying for medical costs.

Funding with a structured settlement annuity routinely saves claimants an average of at least 25%, allowing the settlement proceeds to stretch further. Funding with a structured settlement annuity is also typically less expensive for the defendant or insurer, making it an appealing tool for resolving the claim. There are various annuity options to choose from, each with varying cost savings and its own set of guidelines regarding how and if payments are made upon the death of the claimant.

Contact Sage Settlement Consulting for Medicare Set-Aside Assistance

A proactive approach to establishing and properly funding a Medicare Set-Aside will help maximize your client’s settlement proceeds and protect their long-term Medicare eligibility. Sage Settlement Consulting partners closely with industry leaders on all aspects of MSAs, including allocation, funding, and administration. To learn more, contact us today.

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