Beneficiaries - Solutions for Workers' Compensation and Liability Settlements

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

21/Jun/2023

Some people may be surprised to learn that an individual does not always need to be a citizen of the United States to qualify for government benefits such as Social Security Income (SSI), Social Security Disability Insurance (SSDI) or Medicare. Provided the individual receives or qualifies to receive SSI or SSDI benefits, and the person otherwise qualifies for Medicare, a non-US citizen (non-citizen) typically qualifies for Medicare Part A without having to pay a premium. They would still need to pay a premium for Medicare Part B. Before addressing how a non-citizen may become eligible to receive Social Security benefits and therefore, be one step closer to qualifying for Medicare, we will first look at the distinctions between SSI and SSDI and how US citizens become eligible for either.

SSDI and SSI Requirements for U.S. Citizens

For U.S. citizens to qualify for SSDI, they must be under 65, have earned enough work credits¹ by working and paying Social Security (FICA) taxes, and have a qualifying disability sufficient to meet the definition designated by the Social Security Administration (SSA). A majority of those who apply for SSDI do not get accepted on the first try. Many injured individuals have found value in retaining attorneys to help with the application (and the commonly required appeals) process.

A major distinction between SSDI and SSI is that SSI does not require any work history or the need for the individual to be disabled, even though disability is one of the ways a person may qualify for SSI. For example, those that are disabled but haven’t accumulated enough work credits to be eligible for SSDI, may qualify for SSI. Furthermore, U.S. citizens who are 65 or older, or who are blind or are disabled, and have limited income and limited resources, and are not confined to an institution, are generally eligible for SSI. Another important distinction between SSDI and SSI is that once a person receives SSDI benefits for two years² , the SSDI recipient will be eligible for Medicare benefits.

Requirements for Non-U.S. Citizens

If a person is a non-citizen and meets the following requirements, they may be eligible for Social Security benefits:

Non-citizens who are legal permanent residents
Active members or veterans of the U.S. military
Foreign workers who have paid FICA taxes for the required time period³
Other non-citizens who are not permanent residents but who can prove that they are here legally (i.e., refugees, those under political asylum, temporary visitors with non-immigrant visas, abuse victims, etc.)

There are many exceptions and rules regarding non-citizens’ status and SSI and SSDI eligibility. Additionally, non-citizens that are allowed to work in the US but not required to pay FICA taxes (and don’t), are not eligible for SSDI.

Aside from standard SSDI eligibility requirements that everyone must meet*, there are two additional requirements that non-citizens must meet in order to qualify for SSDI:

1. If an individual was assigned a Social Security number on or after January 2, 2004, the individual’s number must have been assigned based on their authorization to work in the U.S. or they must have B-1, D-1, or D-2 worker status.
2. Before receiving disability benefits, the individual must show proof that they are in the U.S. legally.

Non-Citizens Returning to their Countries

Once an individual receives either type of Social Security benefits as a non-citizen, if, when and how these benefits will be distributed depends on the country that they are citizens of and how much time they may spend in that country, whether that country is on a restricted list, and whether that country has a bilateral Social Security agreement with the U.S. Some countries that the SSA is restricted from sending Social Security payments to, such as those listed below, are disqualified from accepting Social Security payments.

- Azerbaijan
- Belarus
- Cuba
- Kazakhstan
- Kyrgyzstan
- Moldova
- North Korea
- Tajikstan
- Turkmenistan
- Ukraine
- Uzbekistan
- Vietnam

Ineligible Countries

Legal residents from Cuba, North Korea, and Vietnam may not receive disability benefits, even if they meet the other necessary requirements.

If a citizen of one of the above-listed countries, other than from Cuba, North Korea or Vietnam, goes back to their home country after working and living in the U.S. and otherwise qualifies for a form of Social Security Benefits, the SSA will not send the individual payments and cannot send the payments to someone else on their behalf (unless an exception is granted). The SSA will withhold these payments and will only send them to the individual once they are in a country to which the U.S. may send those payments. Generally, if the SSA is not restricted from sending payments to a particular country, but the country also does not have a bilateral Social Security agreement in place with the U.S., the SSA can send payments to the individual, but will stop the individual’s payments after the person has been outside of the U.S. for six months. If the individual returns to the U.S. and stays for at least a month, they are usually eligible to begin receiving benefits again. The SSA’s website provides information and exceptions concerning these matters including the difference between a person receiving benefits based on their own earnings or residency in the U.S. versus receiving benefits based on the earnings or residency in the U.S. of a dependent or survivor. A pamphlet that provides additional information is available on SSA’s website.

The Medicare Secondary Payer Act (MSP), 42 U.S.C. §1395y(b)(2), enacted in 1980 and aimed at preserving Medicare Trust Funds and reigning in Medicare costs that had up to that point been much larger than projected⁴ , is focused on both the timing of payments and the recovery of Medicare’s conditional payments⁵ for medical expenses⁶ of injured Medicare beneficiaries or injured people who have a reasonable expectation of becoming Medicare beneficiaries within 30 months from settlement, when another (primary) payer is responsible for payment or prompt reimbursement of the injured individual’s injury related Medicare covered medical expenses.⁷ There are several ways people fall into the reasonable expectation of becoming a Medicare beneficiary within 30-month time frame, including reaching 62.5 years of age, applying for SSDI, being denied but considering appeal of SSDI denial, being in the process of appealing the denial, or being diagnosed with end-stage renal disease or ALS, a/k/a Lou Gehrig’s disease.

Contact Us

If you have additional questions regarding government benefits for your clients, please reach out to us here. Additionally, if you are involved in a settlement with a client whose government benefits may be at risk, Medivest would like to provide you with the following data chart. It summarizes a variety of public benefit programs and the best course of action you can take to ensure your clients’ benefits are protected. Click here to download.

The number of work credits needed varies based on the age of the individual at the time they become disabled. Required credits start at 6 credits or 1.5 years of work during the three-year period before the disability started for people disabled in or before the quarter they turn 24 years of age and move up to a requirement for 40 qualifying quarters at or after they turn 62 years of age, with varying requirements in between. [↩]
The two-year requirement does not include the approximate six-month wait time between the date disability is approved and benefits begin. Eligibility begins 30 days after the established onset date (EOD) so along with a mandatory five-month waiting period, it is essentially six months before payments start or 30 months from EOD to Medicare eligibility. [↩]
*According to the SSA website, the required work requirements for non-citizens seem to be different from those of US citizens as well. The requirement for non-citizens does not appear to have a sliding scale for work credits that US citizens are required to have. Here is an example of some non-citizen requirements for SSDI eligibility from SSA’s website: “[t]hey are a Lawfully Admitted for Permanent Residence (LAPR) with 40 qualifying quarters of earnings. Work done in the US by a person’s spouse or parent may also count toward the 40 qualifying quarters of earnings, but only for getting SSI. Quarters of earnings earned after December 31, 1996 are not counted if the individual, spouse, or parent worked or received certain benefits from the U.S. government based on limited income and resources during that period. If a person entered the U.S. for the first time on or after August 22, 1996 they may not be eligible for SSI for the first five years as a LAPR, even if they have 40 qualifying quarters of earnings.” More information regarding this topic is available here. Sometimes depending on the country of citizenship, there may also be other ways for a non-citizen to qualify for SSI including living in the US for required periods of time or having a spouse or parent who has lived long enough in the U.S. (See https://www.ssa.gov/pubs/EN-05-10137.pdf). You are encouraged to consult with an attorney practicing in the SSI and SSDI benefits field to help determine whether any particular person may qualify for Social Security benefits. [↩]
Humana Med. Plan, Inc. v. Western Heritage Ins. Co., 2018 WL 549834 (11^th Cir. Jan. 25, 2018) declining to rehear 2016 11^th Cir. case en banc and citing 5 James B. Wadley, West’s Federal Administrative Practice §6305 2017. [↩]
Or conditional payments by Medicare Advantage Plans that a primary payer should have paid. [↩]
Medical items, services, and expenses, including prescription drug expenses. [↩]
42 U.S.C. § 1395y(b)(2)(A)(ii) prohibits Medicare from making payment to the extent that “payment has been made or can reasonably be expected to be made under a workmen’s compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan (including a self-insured plan) or under no-fault insurance.” Furthermore, under the Code of Federal Regulations, the Centers for Medicare and Medicaid Services (CMS) has rights to recover any conditional payments Medicare made that a primary payer should have made or reimbursed, specifically, “CMS may initiate recovery as soon as it learns that payment has been made or could be made under workers’ compensation, any liability or no-fault insurance, or an employer group health plan.” 42 C.F.R. § 411.24(b). [↩]

Aaron Winnell

07/Sep/2022

We’ve all heard how important it is to establish a plan for how our affairs are to be handled after we die. It also comes as no surprise that this plan is best established before we die. Though I have not died yet, all evidence seems to indicate that I will have an exceedingly difficult time addressing these details once I’m dead. Despite this evidence, it is estimated that around half of all Americans have no estate planning whatsoever. So, it should not come as a surprise that those with a Medicare Set-Aside account likewise have no clear plan established for what happens to any funds that may remain once they die. Not having a clear plan can create confusion and aggravation for those responsible to sort out or benefit from the settling of an estate. Addressing these questions at the outset can avoid a lot of trouble. So, what are the main considerations?

Reversionary Interest

Sometimes a settlement will establish a reversionary interest for any remaining Medicare-Set Aside funds. For instance, it may have been agreed that a percentage or all unused funds at the time of the claimant/applicant’s death are to be returned to the funding party. If true, this is a detail that the executor of the estate will want to know. Reversionary Interest arrangements are becoming more popular as a tool in settlements, as more and more Medicare Set-Asides are professionally administered with better cost controls and preservation.

Medicare Set-Asides held within Trusts may be Subject to Specific Rules

If the Medicare Set-Aside was placed in a Special Needs Trust (SNT) to protect access to means tested benefits like Medicaid, or was placed in some other type of trust, there may be a special arrangement already in place that governs what happens to the Medicare Set-Aside funds once the trust beneficiary passes away. If unsure, consult the trust officer as to whether they require any specific guidance, or if the final destiny of the MSA funds have been already decided by agreement or statute.

Tell the Professional Administrator Your Intentions

One advantage of professional administration is that it is more likely that some funds will survive the claimant/applicant due to the strategies a professional administrator leverages. Another advantage is that a professional administrator will disburse all funds it administers directly to the beneficiary designated by the claimant/applicant. Most professional administrators will request that the claimant/applicant designate their beneficiary in writing at the time the account is established. Still, it is not rare for a professional administrator to never receive the claimant/applicant’s written intent. This sometimes causes issues when the final MSA balance is disbursed to the claimant/applicant’s estate.

Also, sometimes life situations will change the intended beneficiary of the Medicare Set-Aside funds. If this changes, it is vitally important to record that change in writing with the professional administrator, to ensure that the claimant/applicant’s wishes are followed. Remember, the professional administrator can only follow the most recent guidance provided by the claimant/applicant.

Medicare’s Interest Must Be Considered

Family members and/or the executor of a claimant/applicant’s estate are typically motivated to settle arrangements as quickly as possible. However, it is important to remember that the Medicare Set-Aside was established to pay for Medicare allowable and injury-related expenses post settlement. Medical providers have a filing window in which to bill for medical services rendered or medications and supplies dispensed or sold. Often, allowable medical claims are received within the first 12 months following a claimant’s death, and the Centers for Medicare & Medicaid Services (CMS) expects the Medicare Set-Aside to pay as primary to Medicare for those claims, even if those claims are received after the claimant/applicant’s death. A best practice is to reserve the MSA funds for a period of twelve months (or until it is confirmed that final billing has taken place) to pay for allowable expenses before disbursing the MSA funds to the designated beneficiary(ies).

Conclusion

Medicare Set-Aside funds are a special type of asset that must be treated differently. They’re intended to protect a claimant/applicant’s access to Medicare benefits, as well as protect the Medicare Trust Funds from unlawfully paying when other funds are primary. But, like other assets, it’s important to declare and/or confirm where these funds are to go once the claimant/applicant passes away to avoid confusion and/or dispute over where those funds eventually go.

You can count on Medivest to help guide you through the complexities of Medicare Set-Aside arrangements. If you have questions about preparing or administering a MSA or you need consultation on any of our settlement services, call us at 877.725.2467 or reach out to us online here.

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