How To Avoid A Medicare Set Aside?

How To Avoid A Medicare Set Aside

When it comes to your health, there is no sense in taking any chances – and this includes ensuring that you have the funds set aside to cover any of your medical costs and expenses.

While insurance policies can go some way towards meeting costs, they are far from foolproof, and set-asides are becoming increasingly common. 

There can be issues to these types of arrangements, however, and we will take a closer look at these below.

What Is Medicare Set-Aside?

In the simplest terms, Medicare set aside refers to a specific amount of money that is put to one side to cover any future medical expenses, and this is taken from a settlement after an auto insurance claim, a workers compensation claim, or employee benefits. 

The goal is to reduce the amount of medical benefit offered by Medicare and to ensure that Medicare is not required to pay for a medical benefit which should have been the responsibility of the party who is deemed responsible for the injury in the first place. 

The amount to be set aside is determined and approved by the Centers for Medicare and Medicaid Services (CMS).

Set-asides are most commonly seen in workers’ compensation claims, as well as no-fault automobile claims, and general liability settlements.

How Does A Medicare Set-Aside Work?

According to federal law, Medicare is deemed to be a secondary payer, and this means that they are not required to meet and cover bills for an injury. 

The exception is when a primary form of payment, such as the money received from a personal injury settlement or workers compensation claim, has been fully exhausted in an attempt to meet the costs of the medical care required.

When you receive money from your insurance provider that is designed to meet your future medical costs, Medicare also takes steps to ensure that this money is exhausted and totally spent on any expenses related to your injury – including medical bills – before the government is asked to step in and begin covering costs through Medicare.

In the event that you are successful in winning a claim for either worker’s compensation or a personal injury case, and you are a recipient, or will be a recipient of Medicare, a specific portion of this settlement will need to be put aside into a specific Medicare Set-Aside account. 

The intention is that this cache is designed to pay for any medical treatment and expenses – only when this pot is empty will Medicare start to cover any costs for medical bills that are related to your injury.

You will also be required to meet and follow a number of rules with regard to record-keeping and reporting, as there are rules as to the way in which the money can be spent; according to Medicare regulations, money can only be spent on any medication or procedures that are covered and approved by Medicare, and the pre-approved price must be paid.

In order to complete a Medicare Set-Aside, you will also need to provide a minimum of two years’ worth of medical and treatment records, as well as a complete history of prescriptions, and a complete record of all payments made and expenses incurred.

A Medicare Set-Aside Evaluation Referral Form will also need to be completed.

What Can I Use My Medicare Set-Aside For?

If you are injured at work, as the result of a personal injury, or during an auto accident, you will be able to use any funds in your Medicare set-aside account to cover the expenses that you incur as a result of your injury. Applicable expenses include:

  • Doctor bills
  • Hospital bills
  • Prescriptions
  • Medical treatments
  • Therapies
  • Home healthcare, including adaptations
  • Durable medical equipment

It must be emphasized that Medicare set aside cannot be used for anything outside these expenses and that everything must be tracked, documented, and recorded in case of an inquiry or investigation.

What Are The Benefits of Medicare Set-Aside

Despite the issues, there are a few undeniable benefits to the system, and these include:

Ensuring You Receive Treatment

The fact that Medicare pays part of the cost of treating your injuries once the allocated funds have been exhausted means that you won’t have to worry about paying anything towards them yourself. 

How To Avoid A Medicare Set Aside (1)

This makes it much easier to obtain medical attention and ensures that you get a proper diagnosis and treatment as quickly as possible.

In addition, if you are prescribed something else along with your usual medications, it can mean that you don’t have to go back to your GP and ask him to repeat the prescription. It saves both time and money.

Making Your Claim Easier

By putting some of your own money aside in an account dedicated to meeting your future medical costs, you are making sure that you are financially responsible for the entire amount that is needed to treat your condition. 

If you do not have enough money saved up, then you may find that it becomes necessary to access your private health insurance policy, or even take out loans to help pay for your healthcare.

With Medicare set aside, all of the financial worries are taken off of your shoulders.

Providing Care That Is Not Being Paid For

Unlike other insurance policies, such as motor, home, life, accidental death, and dismemberment (AD&D), there are no conditions attached to a Medicare Set-Aside.

This means that you can receive ongoing care from many doctors and specialists without having to worry about how much the treatment costs. 

By providing affordable coverage, Medicare allows people to gain access to the specialist medical treatment they require long after their injuries have healed.

Medicare Set-Asides May Be Used Together with Other Insurance Policies

Although Medicare set-aside is often seen as being separate from other forms of accident and income protection insurance, this isn’t always true.

Some companies offer their employees an extra benefit by allowing them to combine Medicare set-aside accounts with other types of coverages, such as health insurance. 

This helps ensure that the employee doesn’t have to choose between their insurance provider and the doctor they want to see. 

Combine this with a Medicare Advantage plan, which offers additional savings on premiums, and you could end up saving yourself thousands of dollars over the course of a year.

Can I Make Additional Contributions To A Medicare Set-Aside Account?

Yes, you certainly can. As long as the balance of the fund stays above $1,000, you can make contributions to the account at any point during the tax year. 

This includes via direct deposit into the bank account associated with the set-aside, or simply sending cash through the mail. These contributions will increase the value of your Medicare set-aside.

What Are The Downsides of Medicare Set-Aside?

Although there are clear advantages of the scheme, Medicare Set-Aside also comes with a number of disadvantages. and it is these that typically turn individuals off from the system.

Funds Do Not Go To Family After Death

The funds allocated to your set-aside will be directed directly towards covering your current medical expenses. When you die, your family will not automatically receive any of the money that remains. 

Instead, the government takes ownership of the assets in the Medicare set-aside account when the person dies. To avoid this happening, you should name beneficiaries in advance.

Any Compensation Will Be Totally Used Up

One of the main issues that many individuals express with a Medicare Set-Aside arrangement is that the entire balance of a settlement must be used as directed and allocated before any further payments will be made by Medicare. 

Some victims see this as an unfair situation that effectively punishes them twice; first by the accident, and then by their compensation being ring-fenced before medical assistance will be offered.

You May Have To Pay For Your Treatment Out Of Pocket

If you do not use your Medicare set-asides to full capacity, you may be required to pay for some or all of your healthcare out of pocket. It really depends on what type of policy the organization has written for you.

If you are using private insurance, you will need to find out what kind of co-payments you are expected to contribute.

There Is No Guarantee That You Will Get Any Money Back

In addition to receiving ongoing medical attention, Medicare set-aside provides little reassurance that your funds will ever be returned to you. Whilst you are alive, you can be certain that every cent you spend will go towards paying for your future treatments. 

However, if your injury or illness ends up costing the federal government more than the amount allocated to your set- aside, Medicare will likely seek reimbursement for the overspend. 

Fortunately, this rarely happens because the government has tight rules regarding how much it can recover. Still, it might occur. so you should keep a close eye on the progress of your claim throughout the process.

Can You Avoid A Medicare Set-Aside?

A Medicare Set Aside arrangement will never be mandatory, but it is an option that many personal injury attorneys will suggest to their client if the latter is eligible for Medicare, as it is seen as the best way to ensure that all medical expenses and treatments can be met.

A report, known as the Medicare Set Aside, is compiled – this is created by the attorney and parties involved, and lays out the injuries that have been sustained, that would be covered and taken care of by Medicare. 

This report can then be submitted for approval, and, if Medicare agrees, then the amount of money set aside is deemed to be accurate and suitable for a Set-Aside.

You will then need to make sure that you are reporting any purchases and expenses related to your injury to Medicare on an annual basis to retain the plan.

Trying to avoid a Medicare Set-Aside plan is not generally recommended, as it means that you could find yourself in serious medical need, and be unable to access the Medicare that you need to meet the costs and expenses – they can refuse to pay if an arrangement has not been made. 

This could see you forced to receive poor quality care, or go without altogether. You may also find yourself facing hefty private insurance fees, putting you at a greater financial disadvantage.

Final Thoughts

There are a number of things to think about when considering applying for and setting up a Medicare Set-Aside Plan. 

It’s important that you get your questions answered by qualified legal experts who can address any potential problems – they will understand the types of injury claims that Medicare can cover, and be able to offer you tailored, individual advice and support.

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