|
Medicare Set-Aside (MSA) Account Administration: When To Call In the Professionals |
PDF |
| Print | |
|
Articles
|
|
Monday, 25 January 2010 13:57 |
Posted by Douglas M. Brand, CSSC
CEO & President, Medivest Benefit Advisors, Inc.
Many times, one of the last of many difficult decisions to be made in the settlement process is how to administer the Medicare Set-Aside (MSA) monies. Unfortunately, this decision is perhaps the least understood of all the MSA issues. How does each choice protect the interests of Medicare, the claimant, the insurance company, and the lawyers? What are the risks and exposures involved? How do I decide what path to take or how to advise my client?
First of all, you have three basic choices to consider: (1) professional administration, (2) give assistance to the claimant via a self-administration kit, purchased from a professional MSA company or (3) let the claimant administer the funds without assistance.
Professional Administration
A professional administration company, like Medivest, will ensure that all the complex rules established by the Centers for Medicare and Medicaid Services (CMS) for administering MSA’s are complied with. For example, they will establish an interest bearing bank account, pay only Medicare allowable and injury related medical bills, communicate with medical providers, complete all the required accounting to CMS, make sure that all bills are paid according to the required fee schedules. They will also provide phone support and comprehensive transparent accounting to the claimant. Professional administration companies preserve and protect the settlement money and prevent “dissipation risk” (a fancy term that essentially means the risk of money being spent on things other than what its intended for).
Why does all this CMS compliance matter, post-settlement, to anyone except the claimant, you might ask? Well, as it turns out it matters a lot to all parties to the settlement. Medicare can suspend the claimant’s Medicare benefits if the monies are not spent according to the strict CMS guidelines. That could be devastating to the injured person who needs medical care. Not taking Medicare’s interest into consideration, as required by the Medicare Secondary Payer (MSP) Statute, could be a basis for a claimant’s potential claim against the attorney for negligent representation. Also CMS has the right to audit the injured person’s settlement and the Medicare Secondary Payer (MSP) Statute gives strong recovery rights against the defendant (double damages incurred by Medicare plus interest) if it finds it’s interest was not properly considered.
So, in what situations should professional administration be considered? Essentially, CMS requires professional administration if the injured person is mentally or physically incapable of managing the account or complying with the CMS administration requirements, has been declared legally incompetent, or has been assigned a representative payee by the Social Security Administration and the representative payee elects not to serve as administrator of the MSA. Professional administration is recommended for most large settlements and when the injured person has very serious medical conditions, lower education level, or any personal issues that put the funds at-risk. Sometimes professional administration is the “right thing to do” because it provides the claimant peace of mind from the stress of self-administration and dissipation risk.
There are fees associated with professional administration and, unfortunately, CMS does not allow them to be paid from the settlement funds. Therefore, they have to be negotiated at settlement. However, in many cases the cost savings from professional bill review practices will more than offset the fees. Also, funding the fees with a structured settlement annuity can offset the cost of the fees.
Self-Administration With a Kit
A Self-Administration Kit may be appropriate in those cases where the claimant is competent to administer their own MSA account but needs some support from a professional administration company. This kit provides valuable tools to assist the claimant including: a detailed do-it-yourself manual, unlimited phone support and some even provide bill review services and a lifetime pharmacy/DME discount program. The average cost of these kits is about $750-$1,000 per year.
Self-Administration Without a Kit
MSA self-administration is not a simple undertaking. It involves complex compliance with government rules and regulations, accounting expertise and discipline. Additionally, it puts many injured parties in the untenable position of not being capable of complying with Medicare’s requirements while being threatened with the loss of Medicare benefits if they don’t. It should be used sparingly and only in those cases with low dollar settlements or with competent claimants who don’t need any assistance from a professional.
It is important to understand and plan for the MSA administration issues early on in the settlement process because it is a key component to the entire settlement. |
|
|
SSI, Medicaid and SNTs |
PDF |
| Print | |
|
Articles
|
|
Written by Doug Shaw, C.P.A.
|
|
Thursday, 17 December 2009 12:03 |
Today, we continue from where we left off in our previous blog with a look at SSI, Medicaid and SNTs. These three programs are also related to each other in a similar fashion as the three programs explained in the previous blog.
SSI
Social Security Income (SSI) is a federal welfare program funded by general tax revenues (not payroll taxes) which makes monthly payments to people who have low income, few assets and are age 65 or older, blind or disabled. The maximum monthly benefit is $674 in 2009.
Medicaid
Medicaid is a government health program that pays medical bills for certain categories of low-income individuals with few assets, including; children, pregnant women, parents of eligible children, and people with disabilities. It is funded jointly by the federal government and the states, but administered by each state individually. Medicaid benefits are automatically provided to SSI recipients in most states.
SNTs
A Special Needs Trust (SNT) is a trust set up to provide for a disabled individuals extra and supplemental needs, other than basic food, shelter and health care expenses that may be covered by public assistance benefits that the beneficiary may be entitled to receive under various programs such as Supplemental Security Income and Medicaid. Assets in an SNT will not be counted by “means tested” programs like SSI and Medicaid. The SNT therefore protects the beneficiary’s access to these government programs.
Interrelationships
The way these three programs relate to each other is similar to the three programs in the previous blog. If a person is on SSI, then he/she is automatically enrolled in Medicaid. Then, if that person is injured and receives insurance settlement monies, it often times will be put into a SNT to protect that persons eligibility to participate in SSI and Medicaid.
Medivest specializes in the area of Medicare Set Asides and we can assist you in referrals to Elder law attorneys and/or Social Security attorneys, if expert assistance in the other programs is needed. |
|
SSDI, Medicare and MSAs |
PDF |
| Print | |
|
Articles
|
|
Written by Doug Shaw, C.P.A.
|
|
Thursday, 17 December 2009 11:59 |
I recently received a question from a defense attorney who called to ask me to explain how these six programs work and interrelate: SSDI, Medicare, MSAs, SSI, Medicaid, and SNTs. After giving my answer, it occurred to me that others might have the same question. I will review the first three programs here and the rest in my next blog:
SSDI
SSDI (Social Security Disability Income) is a federal disability insurance program funded by payroll taxes. It pays a monthly benefit to people who have worked in the past and have paid Social Security taxes, and are now unable to work for a year or more because of a disability. There is a five month waiting period before benefit payouts begin.
Medicare
Medicare is a federal health insurance program that is funded by payroll taxes, self-employment taxes and premiums. It pays for hospitals (Part A), doctors, outpatient and durable medical equipment (Part B) and prescription drugs (Part D). Most people will pay a premium for parts B and D. Individuals become eligible for Medicare at age 65 or at any age if they have End Stage Renal Disease. Medicare insurance is also provided to all SSDI recipients after they complete a 24-month waiting period.
MSAs
A Medicare Set-Aside (MSA) is Medicare’s preferred method to protect Medicare from paying future medical bills that settlement money should pay. A portion of the settlement money is “set-aside” in a separate bank account and spent down on future injury-related, Medicare-allowable expenses. MSAs are used in workers’ compensation and liability cases to protect Medicare as the secondary payer.
Interrelationships
These three programs relate to each other. Five months after an injury occurs, the injured person may qualify for SSDI benefit payments. Then, after a 24-month waiting period, he/she will automatically become eligible for Medicare. However, by law, Medicare is secondary and cannot pay if there is a primary insurer. So if an insurance settlement occurs, the future medical part of the settlement money will be set-aside in an MSA account and spent on injury related, Medicare allowable expenses. Then if the MSA money runs out, Medicare will pay for those medical bills.
Medivest specializes in the area of Medicare Set Asides and we can assist you in referrals to Elder law attorneys and/or Social Security attorneys, if expert assistance in the other programs is needed. |
|
NAMSAP Publishes Two Articles by MSA Experts |
PDF |
| Print | |
|
Articles
|
|
Written by Doug Shaw, C.P.A.
|
|
Thursday, 15 October 2009 15:43 |
|
A recent publication from the National Alliance of Medicare Set-Aside Professionals (NAMSAP) included articles by two nationally recognized experts in their respective fields. These articles are being reprinted here with the permission of both the authors and NAMSAP. David Korch’s insightful article explains why funding settlements with structures is a win-win situation for both the insurance industry and the injured worker. Paul Doolittle gives a very good perspective on Medicare Set Asides from a claimant attorney’s point of view. Click here to view the article. |
|
|
|
|
|
