Medivest Blog - Company Updates, Industry News, and Insights

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31/Jan/2024

The January 18th, 2024 webinar hosted by Centers for Medicare & Medicaid Services (CMS) entitled Medicare Secondary Payer and Certain Civil Money Penalties (Non-Group Health Plan) is now available in the Download section of the What’s New page on CMS.gov. The webinar can be viewed in its entirety, or you may download the materials covered in PDF format by clicking here.

Medivest will continue to monitor news and updates from CMS and will keep its readers up to date when important announcements are made. For questions regarding the information presented in this webinar or any other recent CMS updates, please reach out to the Medivest representative in your area by clicking here or call us direct at 877.725.2467.

Medivest

23/Jan/2024

On January 22, 2024 the Centers for Medicare & Medicaid Services (CMS) released their data for the Top 10 Section 111 Non-Group Health Plan Reporting Errors July – December 2023. The chart with the list of errors and their rank can be viewed below. A downloadable PDF of this chart along with an explanation of the error codes can be viewed here at the CMS website.

Medivest will continue to monitor news and updates from CMS, and will keep its readers up to date when important announcements are made. For questions about this chart or any other recent updates, feel free to reach out to the Medivest representative in your area by clicking here or call us direct at 877.725.2467.

Sandy Simpson

22/Jan/2024

On January 10, 2024, the U.S. Department of Labor published a final rule, revising its guidance to employers and workers to help determine if a worker qualifies as an employee or an independent contractor (IC) under the Fair Labor Standards Act (FLSA). The final ruling explains that the economic reality test is comprised of six-factors that are a guide to conduct the totality-of-the circumstances analysis to determine economic dependence. The new ruling takes effect March 11, 2024. To view the final ruling, click here.

Misclassification Issues

Employers need to distinguish between employees and independent contractors when considering eligibility for workers’ compensation. Correctly distinguishing between employees and independent contractors is crucial for legal compliance, cost management, liability avoidance, and ensuring workers receive the appropriate benefits and protections. Misclassification can have significant financial and legal consequences for employers.

What is the Economic Realities Test?

The US Department of Labor uses an economic realities test to help employers comply with the law, reduce the risk of employee misclassification, and to help determine if a worker is classified as an independent contractor or as an employee. This test consists of six-factors that are all weighed against each other. All factors should be considered. No single factor determines a worker’s status. No one factor or combination of factors is more important than the other factors. This test considers the totality of the circumstances of the working relationship. Below are the six (6) factors.

Opportunity for profit or loss depending on managerial skill,
Investments by the worker and the employer,
Permanence of the work relationship,
Nature and degree of control,
Whether the work performed is integral to the employer’s business
Skill and initiative

About Medivest

Since 1996 Medivest has been helping our clients navigate the complexities of MSP compliance. We offer settlement solutions for workers’ compensation and liability settlements. Count on Medivest to help keep you up to date with the constant updates regarding Federal Register rulings, Medicare Secondary Payer legislation and changes related to CMS’s enforcement of the Medicare Secondary Payer. For questions, feel free to reach out to a Medivest representative in your area by clicking here or call us direct at 877.725.2467.

Medivest

10/Jan/2024

CMS updated the Medicare Secondary Payer Recovery Portal (MSPRP) User Guide on January 8, 2024 to version 6.0, which outlines updated functionality and improvements to the Portal. The User Guide can be found here.

Changes of Note

Chapter 1 contains a summary of updates / changes, many of which are administrative in nature.

One change of a substantive nature is that the definition of a disputed claim has been updated (Table 15-13).

Language on the Case Creation Continued page for self-reporting a case that is non-trauma based has been updated and clarified (Table 13-3).

Also, to reduce the number of cases submitted in error, beneficiaries, insurers, and authorized representatives now have the ability to close and permanently remove a case from their account that was reported via the MSPRP in error (Sections 12.1.3 and 12.2.4).

Probably most importantly, MSPRP users can now submit any type of correspondence for BCRC or CRC cases via the MSPRP portal. A generic Submit Case Documentation action has been added to the Case Information page, along with subsequent pages used to upload and submit documents. This is extremely helpful because in the past only certain types of documents could be uploaded on the portal and otherwise, had to be faxed or mailed in with the added time and hassle of having to confirm receipt at a later date. Now, all types of documents may be uploaded. This will save time and will help simplify the process for any case and especially those more complex cases that have multiple defendant and/or UIM payers.

Lastly, the Letter Activity tab has been renamed Correspondence Activity and references to these screens and sections have been updated throughout the application (Section 15.1.2.13).

For Additional Information

Count on Medivest to help keep you up to date with the constant updates, guidance, and rule changes related to CMS’s enforcement of the MSP on a regular basis. For questions, feel free to reach out to the Medivest representative in your area by clicking here or call us direct at 877.725.2467.

Sandy Simpson

08/Jan/2024

It is getting close to that time of year when mailboxes begin to receive W-2 statements and 1099-INT statements. If an injured individual has either a Self-Administered Medicare Set-Aside (MSA) account or a Professionally-Administered MSA account, the individual will be sent a 1099-INT by January 31^st and a copy will be filed with the IRS. The 1099-INT shows interest earned in the account during the previous tax year.

Liability and Workers Compensations cases should follow the Workers Compensation Medicare Set-Aside (WCMSA)Reference Guide, until CMS publishes a Liability Medicare Set-Aside (LMSA) Reference Guide. Until then, the WCMSA Reference Guide should be considered a single point of reference for Liability and Workers Compensation cases. To download the WCMSA Reference Guide Version 3.8, Dated November 14, 2022, click here.

What the WCMSA Reference Guide states:

MSA funds must be placed in an interest-bearing account that is separate from the individual’s personal savings and checking accounts.
The interest must be deposited into the MSA account to be used for MSA-covered expenses.
You can use the MSA account to pay for the income tax on the interest income.

For further clarification regarding how the individual can pay for the taxes from the interest incomed earned in their account, refer to the CMS Memo Dated July 11, 2005, Subject: Medicare Secondary Payer (MPS) – Workers’ Compensation (WC) Additional Frequency Asked Questions.

“Q6. Treatment of Taxable Interest Income Earned on a WCMSA – If I receive a Form 1099-INT for the interest income earned on my WCMSA account, may I charge the income tax on that amount against the WCMSA?

A6. Assuming that there is adequate documentation for the amount of incremental tax that the claimant must pay for the interest earned on this set-aside account, the claimant or his/her administrator may withdraw an amount equal to the additional tax as a “cost that is directly related to the account” to cover the additional tax liability. Such documentation should be submitted along with the annual accounting.”

How Medivest Handles the 1099-INT:

Medivest will advise the Member to prepare his/her tax return two ways to determine the increased income tax burden, if any:

Include the MSA interest income in the income tax return
Exclude the MSA interest income in the income tax return

In other words, if the Member must pay the IRS an increased income tax amount as a result of the interest earned from their MSA account, the additional income tax burden can be paid from the MSA account. This is considered a cost associated with having the MSA account and CMS allows this expense to be paid from the MSA account. Once a year, Medivest will send CMS an attestation for every applicable professionally-administered MSA account. Any MSA reimbursement of the additional income tax burden will be included in this attestation.

Answers to Common Questions

Question 1. If I am taxed on the earned interest, why can’t I have it?

Answer 1. CMS’ guidelines state that Medicare Set-Aside funds place must be placed into an interest-bearing account and are to be used for covered medical expenses.

Question 2. Why do I have to report the earned interest to the IRS?

Answer 2. Per IRS guidelines, all interest income is taxable, unless specifically excluded.

Question 3. Isn’t my injury settlement tax-exempt?

Answer 3. Any compensation you receive from a settlement because of physical injuries or sickness is not taxable. However, the interest earned after the settlement occurs is taxable.

Best Practices

Medivest’s highly trained representatives can help you figure out if Medicare may have an interest in your settlement. We assist all settling parties to navigate the MSP complexities and provide you with cost-saving strategies for your settlement. For questions about your account or setting up a new professional administration account please contact us here.

Medivest

04/Jan/2024

CMS will be hosting a webinar regarding Certain Civil Money Penalties Final Rule for NGHP Responsible Reporting Entities (RREs). The format will be opening remarks and a presentation by CMS that will include discussion of the Final Rule, the auditing process and important dates, followed by a question and answer session. RREs who would like to submit questions in advance of the webinar are encouraged to do so using the dedicated resource mailbox at Sec111CMP@cms.hhs.gov.

Date: January 18, 2024
Time: 1:00 PM ET

Webinar Link: https://cms.zoomgov.com/s/1614664558?pwd=enlySUNSSjF1UnMzUy9vRWJodWl1dz09
Passcode: 513018

Or to connect via phone:

Conference Dial In: (833) 568-8864
Conference Passcode: 161 466 4558

Important Note: This is a public webinar and there is no pre-registration needed. The webinar link should only be utilized the day of the webinar. Due to the number of expected participants, please log in at least 10 minutes prior to the start of the presentation.

CMS has also announced it will be hosting a webinar regarding Certain Civil Money Penalties Final Rule for GHP Responsible Reporting Entities (RREs). Information on that webinar can be found on CMS’s website.

Additional information about recent updates from CMS can be found here. If you have questions on how topics discussed in this webinar may affect your clients, please contact Medivest here or call us at 877.725.2467.

Sandy Simpson

20/Dec/2023

You have settled your injury case and have decided to self-administer your Medicare set-aside (MSA) arrangement. Whether you are just beginning to embark on this journey or if you have been self-administering your account for a while and need a refresher, here are a few tips you should know. These tips can help you navigate through this complicated process. They will ensure that you won’t jeopardize your Medicare benefits, help you preserve your MSA funds so they will be there when you need them the most, and will help you prepare to administer your MSA throughout 2024 and beyond.

Helpful Self-Administration Tips:

Set Up your MSA Correctly

Know how your Medicare Set-Aside account will be funded. There are two ways to fund MSA account either with a lump-sum payment or a structured annuity. If your settlement says that it will be funded as a lump sum, one check will be issued. Or, if your settlement says that it will be funded with a structured annuity, then an initial deposit is made to establish the account, followed by annual deposits.
Open a separate bank account to deposit your MSA funds. Do not co-mingle your MSA funds with your personal funds.
Deposit your MSA funds into an interest-bearing bank account, insured by FDIC.
It is recommended to find a bank that does not charge fees when you have a low balance and preferably to find an account that you could write checks on.

Learn the Process and Develop Good Habits Now

Keep your settlement paperwork in a safe place.
Know your date of settlement. Any expense that is injury related, Medicare covered, and has occurred after the date of settlement can be paid out of your Self-Administered Medicare Set-Aside account.
Only use the MSA funds from your account to pay for Medicare covered medical treatment and prescription costs related to your injury, even if you are not yet enrolled in Medicare.
Keep accurate records of the expenses you’ve paid out of your account. You will not submit these records annually, but Medicare may request these records as proof that you are using the account correctly.
- Transaction date
- Check number (if any, or transaction number if present)
- “Payable to” or health care provider name
- Date of service
- Description (procedure, service, or item received; deposit; interest; other allowable expense)
- Amount paid
- Any deposit amount
- Account balance
- Keep itemized receipts
- Banks statements
- Tax records
You will need to send an annual attestation form every year to Medicare, no later than 30 days after the anniversary date of your Workers Compensation settlement regarding funds remaining in the account after expenses have been paid.

Know What Expenses Your MSA Covers

MSA account can be used to pay for the following:
- Cost of copying documents
- Mailing fees/postage
- Any banking fees related to the account
- Income tax on interest income from the account

You may not use the MSA account to pay for:

- Fees for trustees, custodians, or other professionals hired to help administer the account
- Expenses for administration of the MSA (other than those listed above)
- Attorney costs for establishing the MSA
- Medicare premiums, co-payments and deductibles

To learn what expenses are considered Medicare covered. Get the free annual publication called Medicare & You from your Social Security office, or at: https://www.medicare.gov/medicare-and-you/medicare-and-you.html

What to Do When Your MSA is Exhausted or Depleted

If you are a Medicare beneficiary and your funds have been depleted, you can forward your bills to Medicare for payment as long as the expense is Medicare covered and injury related.
If you are not Medicare covered and your funds have been depleted, you will need to coordinate benefits with your other health insurance providers or pay out of pocket.
When your account is permanently exhausted or depleted, which means there is no money left in the account and there will be no future deposits, you will need to submit within 60 days of the date your account is depleted a final attestation letter stating the account is ‘completely exhausted’.
Notify Medicare’s Benefits Coordination & Recovery Center (BCRC) if death has occurred before the WCMSA is permanently exhausted.
If you lose your Medicare entitlement, you are not entitled to release the MSA funds.

What Happens it Self-Administering is Too Difficult?

If learning how to self-administer your MSA on your own is too difficult to navigate, contact Medivest to learn more about our Self-Administration Kit with assistance. Or, if you’re interested in a more hands-off solution, Medivest Professional Administration Services can remove potential risks and the cumbersome tasks associated with administrating your Medicare Set-Aside funds, and in most cases can even stretch the lifespan of a MSA. Please call us at 877.725.2467 or reach out to us here.

Medivest

06/Dec/2023

On December 4th, 2023, Centers for Medicare & Medicaid Services (CMS) shared a new report titled Workers’ Compensation Medicare Set-Aside (WCMSA) Fiscal Year Statistics 2023. The report provides four fiscal years of data regarding Workers’ Compensation Medicare Set-Aside (WCMSA) Proposed Value and Workers’ Compensation Review Contractor Values (WCRC) from 2020 to 2023.

Takeaways

Total Submissions
Total WCMSA submissions to CMS declined steadily between CMS’ FY 2020 and FY 2022, descending from 16,517 to 13,752, a reduction of almost 17% in three years. FY 2023’s 15,743 submission count represents a reversal of that trend for the time being. This may be the result of the appearance of Section 4.3 in the WCMSA Reference Guide in 2022, in which CMS speaks about “non-submit” or “evidence-based” MSA programs, describing them as “a potential attempt to shift financial burden”.

Proposed vs Recommended
Those who decided to voluntarily submit their proposed WCMSA to CMS for review were rewarded with recommendations that were, all told, 22.95% percent higher than the proposed amount. For comparison, the average percentage difference between the submitter’s proposed MSA and CMS’ recommended MSA for CMS’ FY 2020 through FY 2022 was 13.9%. This is an increase of roughly 65% in CMS’ FY 2023 versus the prior three years’ average. Not only is the counter percentage higher, but the total recommended amount is higher. So, it’s not as if submitters have been lowballing their submissions. For those who embraced a non-submit program for fear of significantly higher MSA counters, CMS dangled no carrots in FY 2023 to encourage a return to voluntary submission.

Proposed MSAs and Total Settlement Amounts
WCMSAs submitted by the industry have, on average, consistently ranged between a proposed amount of $70,439 and $74,847 between CMS’ FY 2020 and FY 2023. Total Settlements utilizing WCMSAs over the same period have averaged between $159,579 and $171,170. Accordingly, WCMSAs constitute around 43% of the total settlement amount in which they are included (pre-CMS recommendation).

Medical vs Rx
Medical expenses with MSAs have increased steadily in recent years and CMS’ FY 2023 is no exception. CMS’ recommended total for the medical portion of submitted WCMSAs is up 13% since 2020. Conversely, Rx expenses have declined by 33%. While several factors are likely to be at play here, CMS’ use of sometimes aggressive NDCs to price drugs may be one culprit. Medivest consistently sees submitted MSAs priced using drug NDCs unavailable in the actual market, and well below market average.

The Big Question

These are statistics from those WCMSA’s submitted for approval, meaning they were written by industry-trained professionals in an attempt to match CMS’ recommended methodology. If the industry is consistent, what has changed at CMS? Also, what does this say about CMS’s position concerning non-submitted WCMSA’s that were written to Evidence-Based Medicine or other non-submit standards in light of the previously modified Section 4.3 of the WCMSA Reference Guide?

For Additional Information

Medivest will continue to monitor changes occurring at CMS and will keep its readers up to date when such changes are announced. For questions, feel free to reach out to the Medivest representative in your area by clicking here or call us directly at 877.725.2467.

Natt Reifler, Esq., CMSP, VP of MSP Compliance

14/Nov/2023

On November 13, 2023, CMS hosted a previously announced webinar focused on its upcoming expansion of Total Payment Obligation of Claimant settlement data (TPOC) to be reported under the Medicare Secondary Payer statute’s (MSP) Section 111 Mandatory Insurance Reporting.

The additional TPOC settlement data to be reported specifically includes whether a WCMSA amount was established and if so, any amount above $0.00 so designated, the amount that was approved by CMS (if applicable), the period of coverage (i.e. life expectancy of the injured worker), the funding type – whether funded by lump sum or via a structured annuity (without commenting on any preference or presumptions by CMS if funded one way or another), if funded by structure, the seed amount (a type of down payment estimating the first two years of coverage plus initial surgery for any included body part(s), the anniversary deposit (when additional annuitized payments would be made), the Case Control Number (starts with a W if submitted to CMS for approval or a 0 or 1 if not submitted), and the Professional Administrator’s EIN.

The premise for including the additional WCMSA information with TPOC data is to allow CMS to flag injury related medical diagnosis codes (ICD codes) in the Medicare beneficiaries’ record called the Common Working File (CWF) with a “W” (at least for those WCMSA’s that have been approved) to assist CMS in being more efficient at denying payment for medicals that are injury related and compensated in the TPOC settlement. The Workers’ Compensation (WC) carriers or self insureds appoint Responsible Reporting Entities (RREs) to currently provide Section 111 data for both ongoing claims with Ongoing Responsibility for Medicals (ORMs) and for settlements (TPOCs). Under this expanded reporting data set, RREs would be expected to submit this information for then current Medicare beneficiaries, with testing to occur in 2024 and implementation projected to begin in early 2025 as early as January 2025. While presenter John Jenkins, CMS Health Insurance Specialist, who also presented for CMS when the addition of Section 4.3 in the Workers’ Compensation Medicare Set-Aside Reference Guide (WCMSA Reference Guide) was announced and when CMS modified that language, made it clear that this expanded reporting expectation would not extend to No Fault or liability settlements compensating for future medicals (i.e. NFMSA’s or LMSA’s), he did say it was intended to cover WCMSA TPOC information even if the WCMSA at issue was not submitted to CMS for review/approval. For example, if the WCMSA allocation report used an Evidenced Based Medicine cost projection Method or other non-submit projection method as opposed to a CMS cost projection methodology espoused under the WCMSA Reference Guide, Jenkins explained that there would still be an expectation that this additional data would be reported to CMS.

Jenkins also indicated that once the WCMSA information is reported under Section 111, notification would be sent to the Medicare beneficiary directly.

As background in describing the history of Section 111, Jenkins reminded listeners that Section 111 is part of the federal MSP statute (42 U.S.C. Section 1395y(b)(2) et seq., and that its provisions were added to the MSP pursuant to the 2007 Medicare and Medicaid SCHIP Extension Act (MMSEA)(implemented a few years later). He also pointed out that in addition to the federal MSP statute, the regulations to the MSP are found in the Code of Federal Regulation (CFR) and that 42 C.F.R. 411.46 specifically, reiterates Medicare as a secondary payer to Workers’ Compensation claims (including for both ORM and TPOC’s, and that nothing in the webinar would replace any existing requirements of Responsible Reporting Entities as to thresholds for reporting ORM or TPOC’s).

Answers to questions from the webinar audience were provided by both Steve Forry, CMS Director Division of MSP Program Operations and presenter, John Jenkins, CMS Health Insurance Specialist.

Questions regarding the webinar’s contents and the subject matter may be submitted to CMS via its dedicated Section 111 email address, s111WCMSA@cms.hhs.gov.

Take Aways

This webinar gives us a glimpse as to how CMS intends to address the EBM and other non-submit WCMSA’s that it originally referenced when it added Section 4.3 to the WCMSA Reference Guide. How CMS will be able to require data for something that is not required by law was not elaborated on and is yet to be seen. However, as we in the MSP industry have always understood, while the WCMSA submission process is and has always been voluntary, we always knew that if you submit for approval, you are essentially now in the CMS arena where you will be playing by its guidance/rules. Now, even if you don’t submit a WCMSA for approval, ostensibly for your RRE to be able to complete the Mandatory Insurance Reporting under Section 111, it seems the WCMSA amount and other new data will be available for CMS to assist it in its quest to comply with the MSP and prevent Medicare from paying until the primary plan’s injury related future compensation has been exhausted.

Claimant attorneys should be made aware of this procedure at the time it is implemented so they can field questions that may come back to them by injured workers. Likewise, adjusters handling WC claims may also get follow up calls asking for clarification and what the notification means. Ultimately, this means that representatives for WC carriers and representatives for injured workers should solidify their methods of providing informed consent to their respective clients so that nobody is surprised when a post settlement injury related medical that is usually Medicare covered is denied. For those who establish WCMSA’s, the solution is to bill the WCMSA, document the expenditure (with items and services priced at the respective fee schedule rate and the prescription drugs at Redbook Average Wholesale Price (AWP), and keep up with attestations to CMS on an annual basis so that once exhausted, Medicare would become primary.

What’s New?

A new coversheet is available for any Non Group Health Plan (NGHP) or agent when corresponding with the Commercial Recovery Center (CRC) and can be found here: CRC NGHP Correspondence Cover Sheet (cms.gov)

The NGHP Appeals Quick Reference Guide was updated and is available here: NGHP Submit Appeals Quick Reference Guide April 2023 (cms.gov)

For Additional Information

Medivest

24/Oct/2023

Last year, Medivest wrote about the importance of protecting your client’s government benefits during the settlement process. The full blog can be read here, but to quickly summarize:

If settlement proceeds are handled incorrectly, eligibility for government benefits may be jeopardized. Depending on the eligibility criteria of the specific benefit program, different planning solutions and courses of action should be considered to help the injured party maintain their benefit eligibility.

However, attorneys need to be aware of another potential risk for their clients’ means-tested benefits. If your client is fundraising to cover the cost of their medical bills and/or services and equipment that insurance does not cover, they could potentially lose their government benefits, particularly Medicaid and Supplemental Security Income (SSI) before the settlement has even begun.

How Benefits Become Endangered

Because the settlement process is often a slow one, crowdfunding services such as GoFundMe have become an increasingly common way for injured parties to cover their medical expenses. When someone engages in fundraising and receives donations or contributions, it can increase their income and assets, potentially pushing their financial situation above the eligibility threshold for these government benefits. Here is how it can happen:

1. Income Increase: Fundraising often involves receiving money or valuable items as donations from friends, family, or the community. This additional income can be considered when determining eligibility for means-based benefits. The increase in income may exceed the allowable limits set by the government program.

1. Asset Accumulation: In some cases, fundraising can lead to an accumulation of assets or resources, such as savings accounts, stocks, or valuable items. These assets can also be taken into account when determining eligibility for government benefits, as they may exceed the allowed asset thresholds.

1. Reduced Benefit Amounts: If a person’s income or assets exceed the program’s limits, they may no longer qualify for certain government benefits, or their benefit amount may be reduced. This can result in a loss of crucial financial support, including healthcare coverage, food assistance, or cash benefits.

1. Reapplication and Reporting Requirements: Individuals receiving means-based benefits are typically required to report any changes in their financial situation promptly. Failure to report increased income or assets from fundraising can result in legal consequences, including the requirement to repay benefits received improperly.

1. Loss of Eligibility: In some cases, if an individual’s income or assets exceed the program’s limits, they may become ineligible for benefits altogether. This can lead to financial hardship for the person and their family, as they may have been relying on these benefits to meet their basic needs.

This does not mean fundraising should be avoided by an injured party. It simply means it should be done carefully and with consultation. Setting up a special needs trust or ABLE account is a good practice, but most clients (and some attorneys) would need outside professional assistance setting one up. However, for plaintiffs in the early stages of settlement, a new charity called The Plaintiff Fund may provide an effective additional option.

The Plaintiff Fund

Beginning in January of 2024, the Plaintiff Fund will provide plaintiffs support in creating a medical fundraising campaign, with $1,000 toward their medical expenses, and a national resource network of medical service and product providers. So not only are plaintiffs able to get a partner experienced with fundraising and a start-up donation, but they also get peace of mind knowing their government benefits will remain intact.

Even after settlement is completed, some plaintiffs may learn that their medical bills and expenses exceed the future medicals portion of their settlement. The Plaintiff Fund is available for those individuals as well and is a great support tool for attorneys to offer their client after the case is completed.

The Plaintiff Fund will be invaluable to many plaintiffs. We at Medivest are proud to support it! Everyone who supports plaintiffs should get involved! For further information about the Plaintiff Fund or to make a donation to their cause, visit them at website. For additional services to stretch and protect the medical portion of your clients’ settlement, such as Professional Medicare Set-Aside Administration, contact Medivest here.

Newer Posts

Older Posts

Misclassification Issues

What is the Economic Realities Test?

About Medivest

Changes of Note

For Additional Information

What the WCMSA Reference Guide states:

MSA funds must be placed in an interest-bearing account that is separate from the individual’s personal savings and checking accounts.

The interest must be deposited into the MSA account to be used for MSA-covered expenses.

You can use the MSA account to pay for the income tax on the interest income.

For further clarification regarding how the individual can pay for the taxes from the interest incomed earned in their account, refer to the CMS Memo Dated July 11, 2005, Subject: Medicare Secondary Payer (MPS) – Workers’ Compensation (WC) Additional Frequency Asked Questions.

“Q6. Treatment of Taxable Interest Income Earned on a WCMSA – If I receive a Form 1099-INT for the interest income earned on my WCMSA account, may I charge the income tax on that amount against the WCMSA?

How Medivest Handles the 1099-INT:

Medivest will advise the Member to prepare his/her tax return two ways to determine the increased income tax burden, if any:

Include the MSA interest income in the income tax return

Exclude the MSA interest income in the income tax return

Answers to Common Questions

Question 1. If I am taxed on the earned interest, why can’t I have it?

Answer 1. CMS’ guidelines state that Medicare Set-Aside funds place must be placed into an interest-bearing account and are to be used for covered medical expenses.

Question 2. Why do I have to report the earned interest to the IRS?

Answer 2. Per IRS guidelines, all interest income is taxable, unless specifically excluded.

Question 3. Isn’t my injury settlement tax-exempt?

Answer 3. Any compensation you receive from a settlement because of physical injuries or sickness is not taxable. However, the interest earned after the settlement occurs is taxable.

Best Practices

Helpful Self-Administration Tips:

Set Up your MSA Correctly

Learn the Process and Develop Good Habits Now

Know What Expenses Your MSA Covers

What to Do When Your MSA is Exhausted or Depleted

What Happens it Self-Administering is Too Difficult?

Takeaways

The Big Question

For Additional Information

Take Aways

What’s New?

For Additional Information

How Benefits Become Endangered

The Plaintiff Fund

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