Does Medicare Set Aside Only Apply to Workers' Compensation Claims?

Medicare insurance benefits are available to retired and disabled individuals as a government-funded health insurance plan. Medicare regulations assign certain guidelines -- known as set-aside allocations -- in cases where a recipient carries additional health coverage through other insurers. And while workers' compensation claims typically require Medicare to employ set-aside guidelines, certain types of no-fault and liability claims may also warrant their use.

Medicare Set-Aside Allocations

• Medicare set-aside allocation (MSA) guidelines became common practice within workers' compensation claims as a result of the Medicare Integrity Program Act of 1996. As part of the Health Insurance Portability and Accountability Act (HIPAA) the Medicare Integrity Program manages claim settlement processes for Medicare recipients. These guidelines specifically lay out Medicare's role within a claims settlement process involving a Medicare recipient. Within the claims process, Medicare draws up a proposal that lists a recipient's injuries, expected treatment needs and any costs associated with treatment. Medicare proposals also define timelines in which payment will be made and identifies Medicare's role during different stages of the claims and payment process.

Secondary Coverage Provider

• Workers' compensation benefits are usually covered by an employer's health insurance plan, so anytime a claim is filed, the health plan covers at least a portion of the costs for medical treatment. Whenever a Medicare recipient carries another form of health coverage, Medicare automatically becomes a secondary coverage provider. This means, whatever benefits are available through a recipient's "primary" provider must be exhausted before Medicare coverage can begin. And while no-fault and liability claims may also involve multiple insurance carriers, the use of set-aside allocations within liability and no-fault suits is less common than with workers' compensation claims.

Types of Claim Settlements

• Medicare set-aside allocation guidelines apply for two types of claims settlements involving Medicare recipients. Class 1 settlements involve people who already receive Medicare benefit coverage, which includes persons who've reached retirement age and disabled individuals. For Class 1 settlements, the size of the settlement amount doesn't matter. Class 2 claim settlements involve people who are expected to receive Medicare benefit coverage or have appealed a denial decision. Class 2 settlements also must involve a settlement cost of more than $250,000. Both workers' compensation and liability settlement claims can fall within the Class 1 or Class 2 categories.

No-Fault & Liability Settlement Problems

• The laws surrounding Medicare's role as a secondary coverage provider require reviewers to determine Medicare's cost obligations when a recipient is involved in a no-fault or liability claim settlement. The differences between workers' compensation and no-fault or liability claims pose a problem for Medicare reviewers when trying to apply set-aside allocation guidelines. Workers' compensation claims typically involve a straight-forward cost analysis of medical treatments needed, while liability and no-fault claims may involve extraneous factors, such as damage costs and identifying who is at fault. These factors fall outside Medicare's standard MSA guidelines, which are designed to asses workers' compensation claims. As a result, Medicare is not required or obligated to use set-aside guidelines when dealing with liability or no-fault settlement claims.