A Medicare Set-Aside (MSA) is a financial arrangement, typically established as part of a workers’ compensation or liability settlement, designed to protect Medicare’s interests when settling claims that include future medical expenses. It involves allocating a specific portion of the settlement funds to cover future medical expenses related to the injury or illness that would otherwise be covered by Medicare. The allocation is intended to ensure that the individual uses the designated funds for qualified medical expenses before seeking Medicare coverage. For example, if a settlement includes $50,000 for future knee replacement surgery and related care directly attributable to a workplace injury, this sum may be designated as an MSA.
The proper establishment and funding of an MSA are crucial for several reasons. It protects individuals’ future Medicare eligibility by demonstrating a good-faith effort to exhaust settlement funds on injury-related care before relying on Medicare. Furthermore, it shields the settling parties (employer, insurer, defendant) from potential future claims by Medicare related to the beneficiary’s medical care, which is a significant benefit. Historically, MSAs arose from concerns that settlements were being structured to shift the burden of future medical expenses to Medicare, a practice the Centers for Medicare & Medicaid Services (CMS) sought to address through policy guidance and review processes.
