There are many factors which have to be considered when an injured worker wants to settle his or her workers’ comp case in PA. Even aside from the primary things people think about, such as how much money will be involved, one has to determine if approval from the Centers for Medicare Services (CMS) will be required.
Under Federal Law, known as the Medicare Secondary Payer Act, all parties to workers’ compensation settlements in Pennsylvania must “consider the interests of Medicare” with regard to the settlement. This is regardless of whether the injured worker is entitled to Medicare or not. CMS does not want the burden of future medical treatment for the injured worker to simply be shifted from the workers’ compensation insurance carrier to Medicare.
CMS has certain guidelines for when their approval is needed. When a workers’ compensation settlement is more than $25,000.00 and the injured worker is entitled to Medicare, CMS must actually approve the terms of the settlement. Additionally, if the workers’ compensation settlement is over $250,000.00 (it is extremely rare for a workers’ comp settlement in PA to be more than $250,000.00) and the injured worker has a “reasonable expectation” that he or she will be entitled to Medicare within 30 months of the date of the workers’ compensation settlement, again, CMS must approve the settlement. In particular, CMS will want to approve the amount of the settlement which is allocated to future medical treatment.
Even if the injured worker does not meet either of the two thresholds above requiring CMS approval for the workers’ compensation settlement, the parties still must consider the interests of Medicare in the settlement. Many times, this still requires some amount of the settlement proceeds being allocated to future medical treatment.
When there is a portion of the workers’ compensation settlement being allocated to future medical treatment, whether in a case that CMS has granted its approval or not, a Workers’ Compensation Medicare Set-Aside (WCMSA) is created. This is supposed to be set up as a trust, though the injured worker is usually the trustee. The WCMSA money is to be placed in a separate, interest bearing, account. These funds are then to be used only for medical treatment for the work injury, which would otherwise be payable by Medicare. The theory is that once this WCMSA is exhausted, and the injured worker has properly accounted for every dollar spent, then Medicare will begin to pay for treatment related to the work injury.
Settling a workers’ compensation case in Pennsylvania is a very complicated process, even beyond the obvious issues of how much a case is worth, and the terms of a settlement. There are many pitfalls involved in the process, and consulting with an attorney experienced in PA workers’ comp matters is always a good idea.