Structured Set-Aside Arrangements

A WC Medicare Set-aside Arrangement can be established as a structured

arrangement, where payments are made to the arrangement on a defined

schedule to cover expenses projected for future years. In a structured Medicare

set-aside arrangement, monies are apportioned over fixed or definite periods of

time. In such cases, Medicare will not agree to cover the beneficiary if there is

no verification that the funds apportioned in the arrangement have been

exhausted. Medicare does not make any payments until the contractor

responsible for monitoring the individual's case can verify that the funds

apportioned to the period, including any carry-forward amount, have been

completely exhausted as set forth in the Medicare set-aside arrangement.

However, CMS will approve a payout amount for services that would otherwise

be reimbursable by Medicare from the WC Medicare Set-aside Arrangement in

the following manner:

(1) The seed money for the WC Medicare Set-aside Arrangement must include

an amount equal to the amount of monies calculated to cover the first surgery

procedure and/or replacement and two years of annual payments.

(2) The remainder of the approved amount should be divided by the remainder of

the claimant’s life expectancy (or a shorter defined period of time if CMS has

agreed to a shorter time period).

(3) Subsequent annual deposits into the WC Medicare Set-aside Arrangement

are to be based upon a set “anniversary date” which cannot be more than one

year after the settlement date.

In a structured Medicare set-aside arrangement, if funds are not exhausted

during a given period, then the excess funds must be carried forward to the next

period. The threshold after which Medicare would begin to pay claims related to

the injury would then be increased in any subsequent period by the amount of

the carry-forward.

Example: A structured set-aside is designed to pay $20,000 per year over the

next 10 years for an individual’s Medicare covered services. Medicare would

begin paying covered expenses in any given year after this $20,000 is

exhausted. However, in 2003 the injured individual needs only $15,000 to cover

all related expenses. The administrator would need to carry-forward the excess

$5,000 into 2004. Therefore, in 2004 a total of $25,000 of Medicare covered

expenses would need to be spent for services otherwise reimbursable by

Medicare before Medicare would begin to cover WC related expenses, but only

for the balance of 2004. This carry-forward process continues until the

accumulated carry-forward plus the payment for a given year is exhausted.

Please note that any structured set-aside arrangement agreed to by the parties

will not be approved by Medicare if the settlement has not adequately considered

Medicare’s interests.