Settlement of your Worker's Compensation Medical Award will affect Social Security Payments
The following is a basic outline, for more detailed information, please review the following:https://www.wrightandsiemont.com/understanding-the-relationship-between-workers-compensation-and-medicare/
Social Security Requires Approval of Work Comp Settlements if you are a BeneficiaryIf you are currently eligible for Social Security benefits, keep in mind the anti-windfall provisions which will give Social Security an *off set.* Without proper structuring of the settlement, you could lose part of your monthly payment amount or put yourself at risk for a repayment claim by the federal government for overpayment of benefits.
There are methods to structure a further medical settlement so that it does not reduce your Social Security monthly payments. We can amortize (spread out over your remaining life expectancy * how long you are expected to live) a lump sum payment. That way, Social Security will calculate your $30,000 settlement at $11.59 per months over 25 years, instead of as a lump sum payment.
Social Security says you cannot retroactively amortize a lump sum settlement after it has been approved by the Judge. Many applicants who settle without their attorneys learn this the hard way.. It is important to include the right language in your settlement, otherwise, you could easily run into serious problems. Social Security can claim an overpayment if you receive a settlement that pays you benefits during the same time you received Social Security. When there is an overpayment, Social Security will reduce your benefits to something like $100 per month until the overpayment is repaid.
Additionally, if you have applied for Social Security benefits, not even receiving them yet * you are still considered a potential Medicare beneficiary. Medicare is the Medical treatment and prescription drug coverage portion of Social Security. By law, the worker*s compensation insurance carrier is required to check and see if you are getting Social Security. If you are, then they have to *take Medicare*s interests into account.* What this means is that so many people were taking a lump sum for their future medical care under a worker*s compensation claim, then going to Medicare for the treatment and prescriptions they were already paid.
Regulations were passed requiring any settlement of future medical has to consider what Medicare might be stuck paying in the future. The insurance carrier has to prepare a summary of what your medical file says you need. This estimate of an injured worker*s future medical care is called a Medicare Set Aside (MSA). It can take several months to prepare and obtain approval of a medical settlement.
Medicare Set Aside - Your Account for Medical Treatment CostsA third party, paid by the insurance company, reviews your medical file for the past three years and comes up with an estimate for your expected treatment, diagnostic testing, prescriptions, and possible future surgery.
This MSA analysis is then sent to the Centers for Medicare Services, who will review the proposed amount and either approve or disapprove it. If the amount is too high for the insurance carrier, they will simply decline to settle. Then they will wait and send all treatment requests through UR (Utilization Review) and reduce future medical that way. In another three years, UR will have denied most of the treatment, which means your MSA will be very small.
Once you have the amount determined and agreed upon with the insurance carrier, the parties draft the settlement, called a Compromise and Release. This settles everything, including your medical award.
The medical treatment you need for the work injury in the future will be PAID BY YOU. Once per year, you have to send in a form to Social Security, stating how much you have paid out. An *annual accounting* * a single page form -- tells Medicare how much you spent that year for medical care out of that account. If you use the funds for something else, Medicare can and will refuse to pay for any medical treatment related to your work injury until you show receipts for the missing funds.