Understanding the Intersection of Workers' Compensation and Medicare: Crucial Facts Explored
Workers' Compensation and Medicare: A Guide for Federal Employees
Navigating the intersection of workers' compensation and Medicare can be tricky, but it's essential for federal employees to understand. Failure to notify Medicare about a workers' compensation arrangement could lead to claim denials and reimbursement obligations.
What's Workers' Comp?
Workers' compensation is an insurance program that provides benefits to employees who have been injured or become ill due to job-related incidents. The Office of Workers' Compensation Programs (OWCP) under the Department of Labor oversees this program, which applies to federal employees, their families, and certain other entities.
Worker's Comp and Medicare: The Connection
Individuals enrolled in Medicare or soon to qualify should be aware of how their workers' compensation benefits could impact Medicare coverage for work-related medical claims. This understanding can help prevent complications with medical costs.
The Impact of a Workers' Comp Settlement on Medicare
Under Medicare's secondary payer policy, workers' compensation must be the primary payer for any treatment related to a work-related injury. If immediate medical expenses arise before the worker receives their settlement, Medicare may pay first and initiate a recovery process managed by the Benefits Coordination & Recovery Center (BCRC).
To avoid a recovery process and monitor the amount a person receives from workers' compensation for their injury- or illness-related medical care, the Centers for Medicare & Medicaid Services (CMS) typically monitors these funds. In some cases, Medicare may ask for the establishment of a workers' compensation Medicare set-aside arrangement (WCMSA) for these funds. Medicare will only cover care after all the money in the WCMSA has been exhausted.
What Settlements Need to be Reported to Medicare?
Workers' compensation must submit a total payment obligation to the claimant (TPOC) to CMS. This represents the total amount of workers' compensation owed to the person or on their behalf. Submitting a TPOC is necessary if the person is already enrolled in Medicare based on their age or based on receiving Social Security Disability Insurance and if the settlement is $25,000 or more. TPOCs are also necessary if the person is not currently enrolled in Medicare but will qualify for the program within 30 months of the settlement date, and the settlement amount is $250,000 or more. In addition to workers' comp, a person must report to Medicare if they file a liability or no-fault insurance claim.
Frequently Asked Questions
Questions about Medicare, workers' compensation, or the Medicare recovery process can be directed to Medicare by phone at 800-MEDICARE (800-633-4227, TTY 877-486-2048). During certain hours, a live chat is also available on Medicare.gov. For questions about the Medicare recovery process, contact the BCRC at 855-798-2627 (TTY 855-797-2627).
A Medicare set-aside is voluntary, but if a Medicare beneficiary wants to set one up, their workers' compensation settlement must be over $25,000. Alternatively, it must be over $250,000 if they are eligible for Medicare within 30 months. It is prohibited to use the money in a Medicare set-aside arrangement such as a WCMSA for any purpose other than the one for which it is designated. Misusing the money can lead to claim denials and reimbursement obligations.
Learn More: What to know about Medicare Set-Aside
Want to learn more about workers' compensation Medicare set-aside arrangements (WCMSAs)? Dive into our comprehensive guide for a deeper understanding of WCMSAs and how they work.
Takeaway
Workers' compensation is insurance for job-related injuries or illnesses for federal employees and certain other groups. It's essential that those enrolled in Medicare or soon to qualify educate themselves on how workers' compensation may affect their Medicare coverage to prevent issues with medical expenses.Always keep Medicare informed about workers' compensation agreements to avoid future claim rejections and reimbursement obligations.
Additional Insights:
Workers' Compensation Medicare Set-Aside Arrangement (WCMSA)
A WCMSA is a financial arrangement that sets aside a portion of a workers' compensation settlement to pay for future medical expenses related to the injury. This arrangement is used to ensure that Medicare's interests are protected after WCMSA funds are exhausted.
WCMSA Reporting Requirements
Reporting a workers' compensation settlement to Medicare is mandatory when the settlement involves a Medicare beneficiary. If failed, penalties of up to $1000 per day, per claim can be imposed.
WCMSA Administration
Once established, a WCMSA is typically administered by the beneficiary or through a professional administrator. The funds are used to pay for future medical expenses related to the work injury. Starting July 17, 2025, CMS will no longer accept or review $0 WCMSA proposals. Instead, parties must independently determine and document whether a $0 WCMSA is appropriate.
- Individuals enrolled in Medicare or soon to qualify should be aware that their workers' compensation benefits could impact Medicare coverage for work-related medical claims, particularly in the case of a workers' compensation settlement.
- Medicare's secondary payer policy states that workers' compensation must be the primary payer for any treatment related to a work-related injury, and failure to submit a total payment obligation to the claimant (TPOC) to Medicare could lead to claim denials and reimbursement obligations.
- A Medicare set-aside arrangement (WCMSA) is a financial arrangement that sets aside a portion of a workers' compensation settlement to pay for future medical expenses related to the injury, and it is used to ensure that Medicare's interests are protected after WCMSA funds are exhausted.
- Reporting a workers' compensation settlement to Medicare is mandatory when the settlement involves a Medicare beneficiary, and failing to do so can result in penalties of up to $1000 per day, per claim.
