Changes Coming to the Way We Take Medicare’s Interest Into Account in Workers’ Compensation Settlements

Medicare’s interests must be protected when negotiating settlements in worker’s compensation claims. This includes scenarios where the settlement also resolves the defendant’s obligation to pay future medical benefits, such as with a full Compromise and Release Agreement in Pennsylvania or a Section 20 settlement in New Jersey.

The most common method of doing so, particularly when Claimant is a Medicare beneficiary, is obtaining a Workers’ Compensation Medicare Set-Aside (“WCMSA”) which projects future medical costs for the work-related injury. This WCMSA allocates that portion of the settlement to pay for future medical services. This ensures that the Center for Medicare and Medicaid Services (“CMS”) will not be responsible for paying for medical treatment related to the workers’ compensation injury until the full WCMSA amount is depleted.

Many practitioners only obtain a WCMSA when it meets the threshold to be reviewed by CMS. CMS will only review a WCMSA in the following circumstances:

• The injured worked is a Medicare beneficiary and the total settlement amount is greater than $25,000; or

• The injured worker has a reasonable expectation of Medicare enrollment within 30 months of the settlement date and the anticipated total settlement is expected to be greater than $250,000.

While the above is typically standard practice, these thresholds are not safe harbors, and CMS requires Medicare’s interests be taken into account in all settlements.

This Spring, CMS will implement new requirements for reporting WCMSA funding in workers' compensation settlements. This change aims to enhance the way Medicare's interests are protected.

As of April 4, 2025, all workers’ compensation settlements, where the injured worker is a Medicare beneficiary and future medical benefits are being settled, must be reported to CMS regardless of the settlement amount.

While every settlement must be reported to CMS, the threshold for determining when an WCMSA can be submitted to CMS for approval remains intact.

These new requirements signal CMS's increased interest in ensuring that Medicare's interests are protected in workers' compensation settlements. Parties involved in these claims must be diligent in reporting WCMSA funding to comply with the new regulations as a violation may result in potential civil monetary penalties for their client.

If you have any questions about whether an MSA should be obtained or how to protect Medicare’s interests, the lawyers at Bennett Bricklin & Saltzburg LLC are available to answer any questions and talk through your options.