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Medicare and Workers’ Compensation

Summary: When you receive an injury or illness due to work, the last thing you want to worry about is billing and insurance. However, it’s vital to understand how Medicare works with workers’ compensation to ensure you get the care you need without paying more than you need to. Estimated Read Time: 7 min

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Table of Contents:

  1. Does Medicare Cover Workers’ Compensation?
  2. Medicare and Workers’ Compensation Coordination of Benefits
  3. Settling Workers’ Compensation Claims
  4. Workers’ Compensation Medicare Set Aside
  5. Workers’ Compensation Medicare Set Aside Arrangement FAQs
  6. How to Report a Workers’ Comp Claim with Medicare

Medicare beneficiaries who are still in the workforce may find themselves in a situation where they need to figure out how workers’ compensation works with their Medicare coverage. While your workers’ compensation claim is being reviewed, Medicare will only cover costs under certain circumstances. Then, once your claim is approved and you receive your settlement, there are certain rules Medicare has in place regarding covering costs related to your work injury. Below, we’ll explain how Medicare works during each step of the process of getting workers’ comp.

Does Medicare Cover Workers’ Compensation?

When you use Medicare alongside workers’ compensation, Medicare will be the secondary payer. This means that any doctors or other healthcare providers you see due to your work-related illness or injury must bill workers’ compensation. Medicare generally will not pay for items or services related to your work-related illness or injury that workers’ comp will pay for within 120 days.

If the workers’ compensation insurer chooses not to pay for your medical bills while your claim is pending, Medicare may make conditional payments. Conditional payments made by Medicare must be repaid from your work injury settlement, award, or other payment.

Medicare will also provide coverage for Medicare-covered items and services related to your work-related injury or illness if the workers’ compensation insurance declines payment. You will need to submit proof of a denied claim to Medicare for your services to be covered.

Occasionally, workers’ compensation will only pay for a portion of your medical bills. This can happen in cases where you had a pre-existing condition (an injury or illness before you started your job) that was worsened by your job. In this instance, the job wasn’t solely responsible for your condition, therefore, the workers’ comp insurer may only agree to pay a portion of your medical bills.

This type of agreement will leave you responsible for paying whatever portion of your medical bills that workers’ comp doesn’t pay. If you are receiving Medicare-covered services, your portion of the bill should be billed to Medicare. After Medicare pays its share, you will be responsible for any out-of-pocket costs that are left.

Medicare and Workers’ Compensation Coordination of Benefits

When you are dealing with more than one insurer, it is important to understand how your benefits are coordinated. In the case of workers’ comp, the workers’ compensation insurer is the primary payer and Medicare is the secondary payer. Because of this, Medicare beneficiaries are required to apply for all applicable workers’ compensation benefits.

Medicare will remain the secondary payer throughout the entire workers’ compensation process. If you settle your workers’ compensation claim and have a Worker’s Compensation Medicare Set Aside account, Medicare will be a secondary payer to your WCMSA.

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Settling Workers’ Compensation Claims

Suppose you decide to settle your workers’ compensation claim. In that case, it is essential to know that you are responsible for repaying Medicare for any Medicare payments already made for services related to your work-related injury or illness.

Often, it is the responsibility of your lawyer to contact the settlement contractor and set up an account to reimburse Medicare for their expenses. It is also important to work with Medicare to designate a Workers’ Compensation Medicare Set Aside Agreement.

Workers’ Compensation Medicare Set Aside

A Workers’ Compensation Medicare Set Aside Arrangement (WCMSA) is a financial agreement that allocates a portion of a workers’ compensation settlement to pay for future medical services related to the workers’ compensation injury, illness, or disease that are Medicare-covered.

WCMSAs can be funded by a lump sum or may be funded with a fixed amount paid each year for a fixed number of years. How your Workers’ Compensation Medicare Set Aside Arrangement is funded will depend on whether you receive a structured or lump-sum settlement from your workers’ compensation settlement.

The purpose of a WCMSA is to estimate the total cost of all Medicare-covered medical expenses that will be incurred for work-injury-related treatments and services throughout the worker’s life and set aside sufficient funds to cover those costs. If you deplete your WCMSA funds and still need further treatment related to your injury, Medicare will then cover any Medicare-covered services like normal.

Creating a WCMSA is not mandatory. However, if you choose not to set funds aside, you may need to spend your entire workers’ comp settlement amount on medically necessary costs related to your claim before Medicare will pay any related costs.

An attorney can help you with your workers’ compensation settlement and can work with the workers’ compensation agency to submit a proposed WCMSA amount to CMS for review. It generally takes CMS 45 to 60 days to review and decide on your WCMSA proposal.

You are not required to submit a WCMSA proposal to CMS, however, getting your WCMSA approved by CMS is recommended. When CMS approves your WCMSA amount, you are given the certainty that the funds are seen as sufficient by Medicare, and thus, you shouldn’t have any issues with Medicare paying for costs related to your injury after your funds are depleted.

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Workers’ Compensation Medicare Set Aside Arrangement FAQs

Is it illegal to spend Medicare Set Aside money? When you have a WCMSA account available, you can only use the funds to pay for medically necessary services, items, and prescriptions that are related to your workers’ compensation claim. You must provide CMS with reporting of all expenditures made from your WCMSA. The funds in your WCMSA account cannot be used for services not covered by Medicare (such as dental).

Where can I open a Medicare Set Aside account? You can open a Workers’ Compensation Medicare Set Aside account at a bank of your choosing. Your WCMSA funds must be deposited into their own account, and it must be an account that earns interest. CMS also recommends that you choose an account that is insured by the Federal Deposit Insurance Corporation (FDIC). If you are handling opening a WCMSA on your own, we recommend reading CMS’s Self-Administration Toolkit for WCMSAs.

If I have a WCMSA, how does billing work? When you receive care related to your workers’ compensation injury, you will need to notify your provider that you have a WCMSA. Your provider should bill you directly, and you will then pay your bill with the funds from your WCMSA account.

What happens when my WCMSA funds run out? When your WCMSA funds run out, your WCMSA is considered “exhausted” or “depleted”. Within 60 days, you will need to submit a final attestation letter to Medicare’s Benefits Coordination & Recovery Center (BCRC) and state that your account is “completely exhausted”. As long as Medicare is satisfied that your WCMSA funds have been spent appropriately, Medicare will cover future treatments for your work injury.

I have a Medicare Advantage plan – is a WCMSA still recommended? CMS still recommends a WCMSA even if you have a Medicare Advantage plan. Just like with Original Medicare, your WCMSA will become primary to your Medicare Advantage plan and must be exhausted before you can use your Part C coverage for your work injury.

How to Report a Workers’ Comp Claim with Medicare

Anytime workers’ compensation pays, reporting the claim information to Medicare’s Benefits Coordination & Recovery Center (BCRC) is crucial. This will ensure the healthcare provider does not receive duplicate payments and protects the insured from returning excess charges to the insurer. You may contact the BCRC yourself, or if you are working with an attorney, your attorney can also notify Medicare.

When contacting the Medicare BCRC, make sure you have the following information: the date of your injury/accident, description of injury or illness, the type of claim (worker’s compensation, no-fault insurance, etc.), and the name and address of the workers’ compensation insurer. If you are working with an attorney, you will need their name, address, and phone number.

Dealing with Medicare and workers’ comp can be challenging, especially when you are trying to receive treatment for an injury or illness. If you have questions regarding Medicare and how it works with workers’ compensation, we recommend contacting Medicare directly, or working with an attorney who specializes in workers’ compensation.

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Sources

MedicareFAQ is dedicated to providing you with authentic and trustworthy Medicare information. We have strict sourcing guidelines and work diligently to serve our readers with accurate and up-to-date content.

  1. Workers’ compensation and payments, Medicare.gov. Accessed March 2024.
    https://www.medicare.gov/supplements-other-insurance/how-medicare-works-with-other-insurance/workers-compensation-and-payments
  2. Workers’ Compensation Medicare Set Aside Arrangements, CMS.gov. Accessed March 2024.
    https://www.cms.gov/medicare/coordination-benefits-recovery/workers-comp-set-aside-arrangements
Kayla Hopkins

Kayla Hopkins

Content Editor
Kayla Hopkins is an accomplished writer and Medicare educator serving as the Editor of MedicareFAQ.com. Upon completing her Communications degree from Ohio University, Kayla dedicated her time to understanding the ever-evolving landscape of healthcare. With her extensive background as a Licensed Insurance Agent, she brings a wealth of knowledge and expertise to her writing.
Ashlee Zareczny

Ashlee Zareczny

Compliance Manager
Ashlee Zareczny is the Compliance Manager for MedicareFAQ. As a licensed Medicare agent in all 50 states, she is dedicated to educating those eligible for Medicare by providing the necessary resources and tools. Additionally, Ashlee trains new and tenured Medicare agents on CMS compliance guidelines. Ashlee is a Medicare expert who specializes in Medicare Supplement, Medicare Advantage, and Medicare Part D education.

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