I am eligible for a lump sum settlement from a work-comp injury. I am 63, and I am receiving Social Security retirement benefits. My attorney told me that Medicare would take a portion of my settlement if the amount were over $250,000. Is that correct? The lawyer states that this amount will be set aside for possible future problems that might develop from my Workers Comp injury. If there is a deduction from my settlement, is that amount put in an interest bearing account? If I seek no additional Medicare assistance due to this WC injury, do I get those monies returned to me?
You are describing what is known as a “Medicare Set-Aside.” Medicare Set-Asides are necessary in some cases because federal law requires the parties to a workers’ compensation claim to take into account the interests of Medicare as a secondary payor.
If the Medicare Set-Aside is to be self-administered, you are generally required to maintain it in a separate, interest-bearing account. In most cases, you may use the set aside funds only for medical expenses pertaining to your work injury, and you will be required to report to Medicare annually regarding your use of the funds. If you use the funds for purposes other than medical expenses pertaining to your injury, Medicare can require you to reimburse your set-aside account and/or refuse to pay for other, non-related medical expenses for which Medicare would otherwise have been liable had you not improperly depleted the set-aside account.
You are permitted to arrange for your heirs to receive or inherit any unused funds remaining in the set-aside account at the time of your death. In such cases, there are generally no conditions attached to your heirs’ ability to use the set-aside moneys.
Medicare set-aside arrangements can differ from case to case. As you are currently represented by counsel, I would advise you to consult with your attorney regarding the specific conditions attached to your particular Medicare Set-Aside arrangement.