Workers' Compensation and Medicare: Key Facts and Considerations
Navigating the overlap between workers' compensation and Medicare is vital for avoiding unnecessary claim denials and reimbursements. Here's a straightforward guide to help you stay ahead.
Workers' comp is insurance for those injured or fallen ill due to their jobs. The Office of Workers' Compensation Programs (OWCP) under the Department of Labor administers this benefit for federal employees, their families, and other eligible entities.
When Medicare and workers' comp intersect, it's essential to understand how the former might impact the latter's coverage of medical claims. This knowledge prevents medical cost complications resulting from work-related injuries or illnesses.
Workers' comp settlements and Medicare
Medicare's secondary payer policy dictates that workers' compensation must cover any treatment related to a work-related injury before Medicare steps in. However, if immediate medical expenses arise before the settlement, Medicare may pay first and initiate a recovery process managed by the Benefits Coordination & Recovery Center (BCRC).
To avoid entanglements, the Centers for Medicare & Medicaid Services (CMS) monitors the amount a person receives from workers' compensation for their injury or illness-related medical care. In some situations, Medicare may establish a workers' compensation Medicare set-aside arrangement (WCMSA) for these funds. Medicare will only cover care after the WCMSA funds have been depleted.
Reporting essentials
The reporting of workers' compensation settlements exceeding $25,000 (or $250,000 within 30 months of Medicare eligibility) is mandatory under the Medicare and Medicaid SCHIP Extension Act (MMSEA) Section 111 requirements.
The primary payer (insurance carriers, third-party administrators) must first determine if the claimant is a Medicare beneficiary at the time of settlement. Once the settlement exceeds the threshold amounts, the primary payer must report detailed information about the settlement to the Centers for Medicare & Medicaid Services (CMS).
Submitting a Total Payment Obligation to the Claimant (TPOC) is necessary if the person is already enrolled in Medicare or will soon qualify within the specified timeframe, and the settlement meets the aforementioned thresholds. Additionally, a person must report to Medicare if they file a liability or no-fault insurance claim.
Frequently asked questions
To ask questions, contact Medicare by phone at 800-MEDICARE (800-633-4227, TTY 877-486-2048). A live chat is also available on Medicare.gov during certain hours. If a person has questions about the Medicare recovery process, they can contact the BCRC at 855-798-2627 (TTY 855-797-2627).
A Medicare set-aside is voluntary, but if a Medicare beneficiary wants to establish one, their workers' compensation settlement must exceed $25,000 or $250,000 within 30 months of Medicare eligibility. Using the money in a Medicare set-aside arrangement for purposes other than its intended purpose can lead to claim denials and reimbursement obligations.
Insights
- MMSEA Section 111 mandates reporting for settlements exceeding $25,000 or $250,000 within 30 months of Medicare eligibility, entailing detailed information submission by the primary payer/insurer. Failure to report could result in civil monetary penalties of up to $1,000 per day, per claim.
- Over 200 data fields are reported, including injury description, medical codes (ICD-9/10), settlement and parties involved, and personal identification of the plaintiff, which triggers a marker in Medicare’s system, ensuring Medicare tracks and denies future treatment related to that claim.
- From July 2025, CMS requires reporting specific WCMSA details, such as WCMSA amount, funding method, initial deposit amount, annual deposit amount, and coverage period, as part of the TPOC reporting.
Takeaway
Understanding the interactions between workers' compensation and Medicare is crucial for avoiding claim denials and reimbursement obligations. Reporting requirements ensure Medicare remains informed of workers' compensation settlements involving beneficiaries and secures its interests by requiring proper use of settlement funds before paying for related future medical care.
- Medicare's secondary payer policy dictates that workers' compensation must cover any treatment related to a work-related injury before Medicare steps in.
- The Centers for Medicare & Medicaid Services (CMS) monitors the amount a person receives from workers' compensation for their injury or illness-related medical care, and in some situations, Medicare may establish a workers' compensation Medicare set-aside arrangement (WCMSA) for these funds.
- The reporting of workers' compensation settlements exceeding $25,000 (or $250,000 within 30 months of Medicare eligibility) is mandatory under the Medicare and Medicaid SCHIP Extension Act (MMSEA) Section 111 requirements.
- Medicare set-aside arrangements are voluntary, but if a Medicare beneficiary wants to establish one, their workers' compensation settlement must exceed $25,000 or $250,000 within 30 months of Medicare eligibility.
