This is Rex Zachofsky, New York Workers Compensation Attorney. I'm coming at you today with a very confusing, very important topic. Something we talk about with clients every single day, something we talk about with insurance companies.
We deal with these all the time, and whether you have a worker's compensation case or a third party personal injury matter, Medicare Set Asides are an important thing. At its most basic primary levels, the Medicare Set Aside serves to protect Medicare's interests and it really serves two purposes.
The first purpose is it gives Medicare the opportunity to look backwards and to make sure that it never paid any medical expenses that it should not have paid, because here the Workers' compensation carrier is responsible for all medical expenses. When you're getting ready to settle the case at a Medicare Set Aside, a formal medical Medicare Set Aside is required. It gives Medicare the opportunity to make sure that they they never paid a bill that they shouldn't have paid, and when that does happen, they look for reimbursement from the insurance company.
The second purpose that a Medicare set aside serves here is it gives Medicare notice of your disabilities or your injuries so they can make sure that they never get stuck paying for future medical care that otherwise would be the responsibility of the Workers Compensation Carrier. Very simply put, Medicare doesn't want to get stuck with any of your medical bills simply because you and your insurance company decided to settle your case. Medicare here is the federal government and you don't want to do wrong by the federal government. They will not let you settle a case, especially where a Medicare Set Aside is formally required because they want to make sure that their interests are protected first and once they ensure that they allow us to go forward and settle your case.
What is a Medicare Set Aside exactly? This is going to be a little confusing. It's a present dollar value estimate of the cost of your future medical care for your causally related expenses. So, they take a look at your injuries. They take a look at your age, they take a look at the treatment you've already gotten, and they try to figure out what treatment you're going to need for the rest of your life. And they put a dollar value on that. And then they take that dollar value and they boil it down to present dollar value. They try to figure out the cost of all the medical care you're ever going to need for the rest of your life in today dollars. It's a little confusing, but it's certainly necessary, and it's necessary in virtually every case.
Virtually every full and final section 32. A section 32 for those who are not familiar is a lump sum type of settlement. It's a full and final complete closure of your worker compensation case. Virtually every single one of them will require some sort of a MSA, whether it's formal or not.
There are two primary types of MSA here. The formal ones that are required by law and required by Medicare, and the informal ones. A formal Medicare Set Aside is required in two circumstances. The first circumstance is this. A formal Medicare Set Aside is required when a person is a Medicare recipient and the settlement value was more than 25 thousand dollars. If you're settling your case for 25 thousand dollars or more and you are receiving Medicare benefits, you need to get a Medicare Set Aside. Or if the person reasonably expects that they will become a Medicare recipient within the 30 months following the date of your settlement. So, from your settlement date moving forward 30 months, if you can reasonably expect that, you will become a Medicare recipient and your settlement is more than 200 and 50 thousand dollars in that circumstance as well, a formal Medicare Set Aside is required.
The only time we really don't require a Medicare Set Aside is in circumstances involving indemnity only settlements and an indemnity only settlement is when we leave the medical open and the insurance company stays responsible for paying for your medical moving forward and we just closed the money portion the indemnity portion of your case. In those circumstances, we don't need a Medicare Set Aside, so we we don't worry about that.
Medicare Set Asides, MSA. We use a term MSA all the time. The formal Medicare Set Asides are submitted to the Center for Medicare and Medicaid Services. They're also known as CMS and it's subject to their approval or their modification. We cannot settle a case without their approval. So if one is formally required in those two circumstances I just discussed we have to get the approval before we could do anything at all. And even in circumstances where a formal MSA is not required, we don't need approval from CMS. But it's still prudent to account for and allocate some money for that person's future medical care. Because if you take a step back and you look at this person got hurt, they probably have a permanent disability. You know whether it's a broken spine or a broken finger and it might require future care and you want to make sure you allocate money for that person to pay for that future medical care. You don't want to leave them high and dry. You want to allocate some money from the settlement to show that from this overall settlement, this much is for your medical. This much is money in your pocket and it's it's just prudent to do it that way. I do see some questions coming in. I'm gonna address those in one moment.
In circumstances with formal MSA's, the amount that goes into the account is what CMS tells us to put in the account. We are bound by what they tell us and sometimes negotiations need to take a turn and we need to go back and renegotiate if you negotiate a 100 thousand dollars settlement and then CMS comes back and says, "Well, 95 thousand dollars is the Medicare Set Aside," Well then clearly there's not a lot of room to work there, so we need to renegotiate settlements. Sometimes that results in an indemnity only settlement. Sometimes there's some other options that we can exercise here to try to get those settlements pushed through and get you the money that you're looking for. But we need to wait for that that formal account.
How do you set up the Medicare Set Aside account? Medicare provides a handbook. I'm going to provide a link down below. It's CMS.gov. And there's a link for the handbook for administering your Medicare Set Aside. Provides all the instructions for setting up and administer administering your Medicare Set Aside account, and that's regardless of whether it was formally required or not. It tells you that the rules for setting up your Medicare Set Aside account administering your care as time goes on. Generally speaking, you have to put the money in a separate interest bearing checking account, which is for the sole purpose of paying for your future medical care. You put the money in the account. It gains interest over time, and as you need treatment, you go to the doctor. You write them a check you hold on to copies of all the paperwork. You hold on to your medical bills and the billing and the the reports, and if the time ever comes, you'll have all your documentation to show Medicare that you properly administered your medical from your MSA account. Sometimes we or the insurance company depends on who's asking.
We utilize something called an annuity. An annuity in certain circumstances is useful in helping a person administer their MSA. An annuity is a financial product. I know it's a kind of a weird definition. It's a financial product that pays a stream of money over a period of time. The reason why we use this is since this money is being set aside for your medical care for the rest of your life, you don't need all that money today or tomorrow. You need it over the rest of your life over a period of time. So what the annuity does is it pays you out over time. Generally the way it works is when your case gets settled, the first payment of the annuity, is an upfront lump sum. We call it seed money. It gets paid and you put that in your account. And then you get regular payments. They're usually annually. Sometimes they're biannually. Sometimes they're monthly, but you get regular payments based upon a schedule that you agree to and you get paid out over a course of time. And sometimes it's ten years or 20 years or 35 or 50 years. Whatever it is, you get paid out your money over time and it goes in the account so you can administer your future medical.
The reason why we do this. The first reason is it saves the insurance company money. When the Medicare Set Aside is a very large number and in some circumstances based upon a person's injury on their life expectancy. Medicare Set Asides can be very big numbers and the insurance company might opt for an annuity because it saves the money. The benefit to you the injured worker is it makes sure that you get paid over that period of time. It's an insurance policy. You got to make sure you get your money because that that that product is financially backed, which is good. But it also gives us your attorney the ability to use that as a negotiation tool, because since we're saving the insurance company some money, maybe we can get a little, we could share in that profit. We could share in that bonus. And sometimes we can use that to get you a little more money on the indemnity side, on the money side, on the side where you're putting money in your pocket. So, we can sometimes use that as a negotiation tool to get you some more money. It's beneficial.
A lot of people here that you know they're not gonna get all their money right now and they and they kind of freak out. Don't freak out. Sometimes it's a good thing. Sometimes it gets you more money overall and you shouldn't be afraid of it. I know the knee jerk reaction is to and if it's your money, you want it. Talk to your lawyer. We can oftentimes use that as a negotiation tool.
Now the other thing similar to annuity is using an outside company to administer your Medicare Set Aside. This is different from an annuity. An annuity pays you over time. What I'm talking about now is using an outside company. This company will take that Medicare Set Aside money, whether it's one lump sum check or whether it's an annuity, and they hold that money and what they do is they administer your care for you. So, rather than you maintaining that checking account and writing checks to your doctor and keeping all your bills and all your medical records, and having a big file folder of all the documentation that goes along with your case, they do all that for you. They hold your funds, they maintain your account and the big benefit here is you don't have to worry about the bookkeeping that's associated with administering your account. Oftentimes they give you what looks like a credit card and when you go to see your doctor and you get it an MRI or you get a chiropractic adjustment or when you get physical therapy the doctor swipes your card. This company will make sure that the doctor gets paid properly, they'll make sure that your account gets documented properly. You never have to worry about any paperwork and it makes life a lot easier.
The downside is they hold your money. You're not in control of that portion of your settlement, the medical portion, another entity and outside companies holding your money and administering it for you. And a lot of people do see that as a downside as well. But it's certainly something to consider, especially if you do need active ongoing treatment moving into the future after your settlement, it's a good tool.
Well, the rules are pretty straightforward here. You're spending the MSA funds on future causally related medical care related to this accident and these injuries. If you get the flu and you got to go to the doctor, you use private. You don't use this money. If you have a car accident last week and it has nothing to do with this case, you don't use this money. This money is only for medical care related to this accident, these injuries and these disabilities.
If you use that money improperly, if you don't follow the rules and regulations, if you decide to go for holistic care in a far away land that's not recognized by Medicare or your doctor overcharges you 10 thousand dollars for one round of physical therapy. If the rules are not properly followed Medicare is not going to allow you the opportunity to seek further assistance, you got to follow their rules. You spend the money properly, spend the money on accepted medical, making sure the doctors don't overcharge you, making sure you're getting the care that would otherwise be administered.
If your case just remained open, can you cash out the account? Well, if you use the money improperly, if you if you go and buy a Porsche with it, if you go and take your family on vacation and you use that money for something else, you're giving up the opportunity to ever go back to Medicare for assistance if that money ever runs out. God forbid, you need a surgery down the road and you've used up the money on a trip to Borabora. Well, you're stuck trying to figure out how you're gonna pay for your surgery, so it's there. There are problems there.
Medicare has very specific rules and you really should follow like I said they are the federal government.
Somebody just asked me a question. "Is loss of use money different than MSA money?" Yes, loss of use, I'm assuming that you're talking about schedule. Loss of use schedule. Loss of use is the value for permanent disability for a a body part, usually at extremity, arms, legs, hands, feet, fingers, toes. That's different than MSA money. MSA money is money that is allocated from the value of a Section 32, usually settlement, a full and final Section 32 settlement. So, sometimes Section 32 settlements are used. In circumstances where there are loss of use, usually when there's multiple body parts or there's a neck in a back involved or something like that, it is different. Loss of use money is technically an indemnity benefit. MSA money is a medical benefit, so it is different. Thank you.
Now we talk about penalties. Generally, you won't have the ability to not set up an MSA or to set up an MSA. Your lawyer in the insurance company, when they're negotiating your settlement and drafting the papers will make sure that an MSA is properly allocated in your settlement. They'll make sure if a formal MSA is required that it's obtained through CMS. They'll make sure everything is done properly. That's one of the reasons why you really want to make sure you have a lawyer. Even if you run the course in your case and you're at the settlement stage, you want to make sure that everything's done properly.
If you fail to get a proper MSA, a judge can deny your settlement. If your case has already been settled and everyone just overlooked the fact that an MSA was was not properly allocated, Medicare could turn around and come after all the parties in the case. You know they could come after you. If there was bills that were paid by them that shouldn't been paid, they can go after your insurance company. You know it opens up a whole can of worms that you really want to avoid. Having an attorney who practices workers compensation and understands mass and the necessities and the requirements. It's very, very important you want to avoid any problems there.
The primary tips, like I said, your lawyer in the insurance company are the ones that are gonna make sure that the MSA is properly set up and allocated and if a formal MSA is required, they're gonna get that. What it really comes down to is discussing things like annuities having outside vendors come in and help you administer your your Medicare Set Aside if that's what you want.
Like I said earlier, a lot of people hear annuity and think, 'I'm not gonna get all my money today,' or 'outside companies gonna hold my money,' and they and they put up their defenses and they get very upset by that. I understand that, it's an instinctual reaction. You're settling your case and you want to get all your money. When you hear that it's going to be pushed off into some other place, people don't like to hear that. But you really need to take a step back, be objective. Talk to your lawyer and understand the purposes here of an annuity. Understand the purposes of having an outside company administer your account. Neither one of them are for everybody, but they are for some people and they are useful tools in a lot of circumstances. So, have that discussion with your attorney. This way you're you're properly taken care of.
You know, it's nice to get a nice big fat check and settle your case and live it up for a little bit. But you want to make sure that you're protected in the future. You want to make sure that you have that cushion there, and that's really the reason why you settled that case. It's to make sure that you're taken care of. You've gotten what you can get out of your case, and you give yourself a cushion so that you can live. You don't want to blow all your money. You want to make sure you're properly cared for, especially if you need ongoing future medical care for these injuries. And that's exactly why the MSA is there. It's so that you can make sure you have that coverage and protection moving forward. So it is important. It's something you should absolutely speak to your attorney about. If you don't have one, you should. It's certainly worth a console. It's a very big step when you settle your case, making sure your MSA's are properly allocated.
I see a few questions here. Some of these questions are MSA related, some are not. My old buddy Andre Green; "They decided to combine my cases, my neck and my hip surgery. Is that good or should I get another attorney?" I unfortunately need a little more information than what you're giving me there. I don't know if these are injuries from two separate accidents that shouldn't be combined. I don't know if it's two injuries from the same accident when they should be combined. If you have multiple multiple injuries from one particular accident, yes, that should be part of the same case. But if you have an attorney, you should certainly sit down with your attorney and ask them these questions and get an explanation that you're satisfied with. And when I say satisfied, I don't mean that you have to walk away happy with the result, but at least understand what's going on. We can't always be happy by every outcome with workers' compensation, but you should speak to your attorney in such a way that you get an understanding of your case and whether or not they should be split or combined. You don't need two attorneys for two different bodily injuries. Talk to your attorney. It's certainly something that you should get some clarification on. Thank you for the question.
Let's see what we got here. MN 54; "I had surgery three years ago and I need injection shots, but the insurance company is not approving them. What should I do next?" Insurance companies love saying no, this is how they make their money. This is how they keep their money. In New York State, the medical approval process goes through what's known as the Portal. Workers Compensation has an online virtual Medical Portal where your doctor requests care and the insurance company responds. And I'm speaking very generally here, I mean to answer your question you should you have to go talk to your doctor. Your doctor's gonna properly make sure you requested the the injections, or whatever care he's requesting. If the insurance company responds and they filed to the denial, your doctor should review that denial, respond to it. He can request what's known as a level two review of the denial. If that gets denied again, there could be a level three. The doctor has up to three shots at the at that request. To answer your question, your doctor's the one with the power here.
We get a lot of calls from clients saying that our treatment not authorized. You know, you got to help me. And it's unfortunate that it's reached the stage that even if I called an insurance company and said, "Hey, my client needs physical therapy. My client needs injections, you have to help them." And even if I get them to agree, they're gonna tell me there's nothing I can do until the doctor properly puts the request into the portal. Only at that point can I approve it. If the doctor's not doing it properly and, I don't mean to dump on doctors, you guys are great. But we've got to be very exact here. The doctor has to make sure that they properly request and if it gets denied they follow up on those denials. With level two and level three accelerated reviews, if there's any issues there, everything is on the portal and they kind of took that out of the attorney's hands. I would certainly ask your doctor what what the next step would be.
Mr. Emn, 54. I see that your case is in New York State, so he did mention his case is in New York State and yes, that's how the New York State system works. The Medical Portal.
If there's any other questions, please. Otherwise, if anybody has any other issues they want to speak.
My telephone number is 212-406-8989 . Any questions about MSA or anything at all? Please give me a call any anytime.
My staff here is always ready, willing and able to assist with any phone calls. Any questions, any issues. Happy Holidays, everybody. Please be safe out there.
We don't want to see you. We don't want to meet you, but when we do, we're gonna take very good care of you.
Be safe and have a wonderful rest of the day. Folks. Thank you.