California Medicare Set-Aside Consultants

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For many claimants, negotiating the payment of future medical bills is an essential component of a favorable settlement. Claimants who currently receive Medicare or who expect to receive Medicare in the near future must follow specific guidelines when it comes to their future medical payments.

Medicare Secondary Payer provisions specify that Medicare will not pay for medical services related to a lawsuit when the proceeds include funds for future medical expenses until all such funds are properly expended. In other words, Medicare becomes the secondary payer to the settlement or award.

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Medicare Set-Asides in California

A Medicare Set-Aside (MSA) is the government’s preferred method for protecting Medicare’s interests. A portion of the settlement is placed into an account to cover future medical costs related to the claimant’s injury. Once the account is depleted, the claimant can begin receiving Medicare payments again.

To create a proposal with a recommended allocation amount, the claimant’s estimated total cost of future medical care will be reviewed, as will the claimant’s medical history, including any pre-existing conditions, current treatments, physician statements, life expectancy, and other factors.

For claimants in California, questions often arise about when a Medicare Set-Aside is appropriate and how it interacts with state personal injury or workers’ compensation law. While the Medicare Secondary Payer rules are federal, the way settlements are structured and approved can vary depending on whether the case is in a California civil court or part of the state workers’ compensation system. We work with attorneys to evaluate whether a Medicare Set Aside California arrangement is needed based on the type of case, the anticipated value of future medical care, and the claimant’s current or expected Medicare eligibility.

When we assist with an MSA, we look beyond the numbers in the medical cost projection and consider how the account will fit into the claimant’s overall settlement plan. That includes discussing who will administer the account, how the money will be invested, and what documentation must be maintained to show that the funds were used only for Medicare-covered, injury-related treatment. This practical planning helps claimants avoid unexpected gaps in coverage and gives attorneys additional confidence that the settlement design supports long-term Medicare Secondary Payer compliance.

Criteria for Reviewing a Proposed Medicare Set-Aside

An expert can help determine the appropriate amount to “set aside” so that the MSA is not over- or under-funded. To date, the Centers for Medicare and Medicaid Services (CMS) has only released guidelines for reviewing Workers’ Compensation Medicare Set-Asides (WCMSAs).

CMS will only review WCMSA proposals that meet the following criteria:

• The claimant is a Medicare beneficiary, and the total settlement amount is greater than $25,000; or
• The claimant is not a Medicare beneficiary at the time of settlement but has a reasonable expectation of Medicare enrollment within 30 months of the settlement date, and the total settlement amount is greater than $250,000.

Within the past few years, CMS has also made advances in the Liability Medicare Set-Aside (LMSA) process. While official guidelines have yet to be released, CMS released a change request (which was modified and reissued on October 27, 2017).

This change request indicates the following:

• Medicare Administrative and Recovery Contractors (MACs) may deny payment for items and services that should be paid from a Liability MSA (or No-Fault MSA).
• Medicare may deny payment for claims if it determines that the claims should have been paid by a liability insurance policy or another payer, as outlined in the Medicare Secondary Payer (MSP) provisions.
• Medicare is within its rights to seek reimbursement for expenses it has paid if those expenses should have been paid out of the settlement or by another payer.

As guidance continues to unfold, it is imperative that attorneys and claimants work closely with a settlement planning expert to avoid Medicare issues. Failure to comply with Medicare Secondary Payer provisions may result in severe consequences for the attorney and the claimant.

In California cases, these CMS review thresholds and enforcement considerations still apply, but attorneys must also account for the documentation needed to support settlement approval and future Medicare compliance. We help plaintiff firms organize medical records, billing information, and projected future care costs to support accurate MSA allocations and determine whether CMS review may be appropriate. Addressing these issues early can help reduce delays, clarify responsibility for future medical expenses, and support a smoother settlement process.

Funding California Medicare Set-Asides

There are two methods of funding a Medicare Set-Aside: with a lump sum or with a structured settlement. The structured settlement option may allow the claimant to retain more of the settlement proceeds, as once the MSA funds are depleted each year, Medicare will cover any remaining injury-related medical costs until the structured settlement replenishes the MSA the following year¹. Claimants who choose to fund an MSA with a lump sum payment must deplete the entire MSA before Medicare resumes paying for injury-related medical care.

When evaluating funding options, we consider the claimant’s anticipated medical needs, financial goals, and long-term care costs. Some claimants prefer the flexibility and potential cost savings of a structured settlement, while others favor the simplicity of a lump sum payment. We also review how the MSA funding strategy fits into the claimant’s broader settlement plan to help support ongoing Medicare compliance and financial stability.

How Our Medicare Set-Aside Process Works in California

Understanding the steps involved in creating and implementing an MSA can make the process feel more manageable for both claimants and their attorneys. We begin by gathering complete medical records, billing data, and information about projected future care so we can work with trusted medical cost evaluators to estimate lifetime treatment needs. At the same time, we review the details of the settlement, including any proposed reductions or compromises, to be sure the MSA amount makes sense in the context of the overall recovery and the claimant’s goals.

Once the allocation report is prepared, we walk the legal team through the findings and discuss options for funding, administration, and coordination with other settlement tools. For California cases pending in venues or the workers’ compensation appeals system, we assist with the language needed to document the MSA in the settlement agreement and related court filings. After settlement approval, we help put the chosen funding mechanism in place and make sure the claimant understands how and when to use MSA funds so that future Medicare coverage is preserved.

Speak with seasoned settlement planning consultants about your California MSA needs by calling (855) 288-7243 now.

Frequently Asked Questions

Do I Always Need California Medicare Set-Asides If I Am on Medicare?

Not every injured person who receives Medicare will need a Medicare Set-Aside. The decision depends on whether the settlement includes funds for future medical care that Medicare would otherwise cover and whether the amount at issue is significant. In California, this analysis can differ between personal injury and workers’ compensation matters, so California Medicare Set-Asides should be evaluated on a case-by-case basis.

Can I Manage My Own Medicare Set-Aside Account?

Some claimants choose to self-administer their MSA, while others prefer to work with a professional administrator. Self-administration requires careful recordkeeping, an understanding of which services are Medicare-covered and injury-related, and the discipline to use the funds only for qualified expenses. Professional administration can reduce the administrative burden, but it is not mandatory in most situations.

What Happens If My Medicare Set-Aside Runs Out Each Year?

If an MSA funded with a structured arrangement runs out of money in a given year after being properly used, Medicare will generally resume paying for covered, injury-related care until the account is replenished. With a lump sum MSA, Medicare typically does not step in until the entire set-aside amount has been exhausted on appropriate expenses. Planning for the timing and pattern of care can help reduce surprises and keep treatment accessible over the long term.

For more information about California Medicare Set-Asides, call Sage Settlement Consulting at (855) 288-7243 today.

¹Claimants who choose the structured settlement option to fund an MSA must make an initial deposit of “seed money” in the amount of the first surgical procedure or replacement and two years of annual payments. The structured settlement will then fund the MSA with annual deposits. Any funds remaining in the MSA at the end of the annual period will be carried forward to the next period. 

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