Medicare and Workers' Compensation: Essential Information to Understand
Federal Workers and Medicare Beneficiaries Must Report Workers' Compensation Settlements
Ensuring proper reporting of workers' compensation settlements is vital for federal employees and Medicare beneficiaries to avoid claim denials and reimbursement to Medicare.
Workers' compensation is an insurance policy that provides benefits for employees who suffer job-related injuries or illnesses. The Office of Workers' Compensation Programs (OWCP) within the Department of Labor oversees this benefit, which applies to federal employees, their families, and other designated entities.
For Medicare-enrolled or soon-to-be-enrolled individuals, it is crucial to understand how their workers' compensation benefits might impact Medicare's coverage of medical claims related to work injuries or illnesses. This knowledge is essential to prevent complications with medical expenses.
Understanding the Impact of Workers' Compensation Settlements on Medicare
Medicare, as a secondary payer, requires workers' compensation to be the primary payer for any treatment related to a work-related injury. In cases where immediate medical expenses arise before an individual receives their workers' compensation settlement, Medicare may pay first and initiate a recovery process managed by the Benefits Coordination & Recovery Center (BCRC). To avoid a recovery process, the Centers for Medicare & Medicaid Services (CMS) generally monitors the amount a person receives from workers' compensation for injury or illness-related medical care. In some cases, Medicare may ask for the establishment of a workers' compensation Medicare set-aside arrangement (WCMSA) for these funds. Medicare will only cover care after all the money in the WPMSA has been exhausted.
Reporting Requirements for Workers' Compensation Settlements
Workers' compensation insurers must report certain claims involving Medicare beneficiaries to the Centers for Medicare & Medicaid Services (CMS). As of April 4, 2025, they must report the WCMSA amount, WCMSA period, funding method, initial deposit amount, and subsequent annual deposits.[2][5]
Workers' Compensation Medicare Set-Asides (WCMSA)
If the total settlement amount is over $25,000 and the claimant is a Medicare beneficiary or anticipates Medicare enrollment within 30 months with an anticipated settlement amount of over $250,000, a WCMSA can be submitted to CMS for approval.[3][5] Additionally, annual reporting is required to maintain compliance and Medicare coverage benefits.[4]
To ensure proper reporting and compliance with CMS requirements, it is recommended to use the Non-Group Health Plan (NGHP) User Guide, consult with experts in Medicare and workers' compensation, and regularly check the CMS website for policy changes and new requirements.[1]
By following these guidelines and working with professionals as needed, Medicare beneficiaries can ensure proper reporting and compliance with CMS requirements.
- For Medicare beneficiaries, it's essential to understand that Medicare, as a secondary payer, requires workers' compensation to be the primary payer for any treatment related to work injuries or illnesses, to prevent complications with medical expenses.
- Workers' compensation insurers must report certain claims involving Medicare beneficiaries to the Centers for Medicare & Medicaid Services (CMS), including the WCMSA amount, WCMSA period, funding method, initial deposit amount, and subsequent annual deposits.
- If the total settlement amount is over $25,000 and the claimant is a Medicare beneficiary or anticipates Medicare enrollment within 30 months with an anticipated settlement amount of over $250,000, a Workers' Compensation Medicare Set-Aside arrangement (WCMSA) can be submitted to CMS for approval.
- To ensure proper reporting and compliance with CMS requirements, it is recommended to use the Non-Group Health Plan (NGHP) User Guide, consult with experts in Medicare and workers' compensation, and regularly check the CMS website for policy changes and new requirements.
