Workers' Compensation and Medicare: Key Insights to Understand
Understanding the implications of a workers' compensation settlement on Medicare is essential to avoid claim denials and reimbursement obligations. Here's what you need to know about workers' comp and Medicare:
First off, workers' compensation is insurance for federal employees and certain other groups who've suffered injuries or illnesses directly related to their job. It's handled by the Office of Workers' Compensation Programs (OWCP) under the Department of Labor.
Now, let's talk about the interaction between worker's comp and Medicare. Under Medicare's secondary payer policy, workers' comp must cover any treatment for a work-related injury before Medicare steps in. If there are immediate medical expenses before the worker's comp settlement, Medicare might pay first and initiate recovery processes managed by the Benefits Coordination & Recovery Center (BCRC).
In some cases, Medicare may ask for the establishment of a workers' compensation Medicare set-aside arrangement (WCMSA) for the funds related to the injury or illness medical care. Medicare won't cover care until all the money in the WCMSA has been used up.
Now, when did the rule change? Well, as of April 4, 2025, all full and final settlements must be reported to the Centers for Medicare & Medicaid Services (CMS). If the settlement exceeds $25,000, no matter the situation, it must be reported. But, if the beneficiary will qualify for Medicare within 30 months of the settlement date, and the settlement is $250,000 or more, reporting is required too.
So, what should you do if you're a beneficiary who has received a workers' compensation settlement? Well, the payer or legal representatives handle the report under the standard Section 111 reporting process. You should provide any relevant documentation or information to help them in this process.
Avoid using the money in the WCMSA for purposes other than those designated, as misuse can lead to claim denials and reimbursement obligations.
Educate yourself on workers' comp and Medicare, and ensure your settlement is reported to the CMS to prevent future claim rejections and obligations. For more resources and guidance on navigating the complex world of medical insurance, visit our Medicare hub.
- The Office of Workers' Compensation Programs (OWCP) under the Department of Labor handles workers' compensation, a type of insurance for employees who've sustained injuries or illnesses due to their job.
- Medicare's secondary payer policy dictates that workers' comp must cover any treatment for a work-related injury before Medicare steps in, and in some cases, Medicare may ask for the establishment of a workers' compensation Medicare set-aside arrangement (WCMSA) for the funds related to the injury or illness medical care.
- As of April 4, 2025, all full and final workers' compensation settlements exceeding $25,000 must be reported to the Centers for Medicare & Medicaid Services (CMS), with an exception made for situations where the beneficiary will qualify for Medicare within 30 months of the settlement date and the settlement is $250,000 or more.
- To prevent future claim rejections and obligations, beneficiaries who have received workers' compensation settlements should ensure their settlement is reported to the CMS, provide any relevant documentation or information, and avoid using the money in the WCMSA for purposes other than those designated.
