June 21, 2023
Tower’s structured settlement partner, Arcadia Settlements Group, gave an in-depth overview of how Medicare Set-Asides, structured settlements, and professional administration facilitate workers’ comp settlements during our recent Premiere Webinar. Our Chief Compliance Officer, Dan Anders, moderated the informative session that featured Alisa Hofmann, Arcadia’s VP of Workers’ Comp and Medicare Practices, and Lori Vaughn, who oversees its structured settlement programs.
As you may know, workers’ comp settlements can be paid out in a lump sum or through structured settlements. Here are some not-so-fun facts about lump sums:
- 25-30% of injured people exhaust lump sum settlement funds within 2-3 months.
- 85-90% of injured people dissipate lump sum settlement funds within 2-5 years.
When injured workers exhaust these funds, if they are Medicare beneficiaries, they turn to Medicare to cover injury-related medical bills. And the whole point of the Medicare Secondary Payer Act is to prevent this.
Structured settlements protect the MSA funds by paying them over time as an annuity. The injured worker receives two years of the MSA allocation at settlement plus the cost of a first procedure or replacement if there are any. The rest of the MSA comes in annual payments, so the injured worker receives a consistent stream of funds for injury-related care over their lifetime.
For payers, this arrangement offers significant savings and a path to faster claim resolution, especially when paired with professional administration. And, like an MSA, the structured settlement shows Medicare that its interests are protected.
A Couple of Takeaways:
- Structured settlements aren’t only for MSAs. They can be used for indemnity and funds for healthcare services and equipment not covered by Medicare. Even attorneys can be paid through these.
- CMS-approved lump sum MSAs can be converted to a structured MSA but require submission to CMS of an attestation from the injured worker agreeing to the change.
- It is easier to submit the MSA to CMS in the structured settlement format as if it is later decided to go with a lump sum there is no need to submit an injured worker letter to CMS agreeing to the change. In short, submitting in this format saves time, money and frustration.
Hofmann and Vaughn also discussed self-administration versus professional administration of the MSA. They urged payers to educate injured workers on the risks, rules, and responsibilities of MSA administration.
CMS prefers professional administration. Plus, some companies like our partner Ametros provide medical and pharmaceutical savings in addition to managing the fund and reporting.
With examples that show how structured settlements are calculated, the webinar is great for new claims representatives and those who want a refresh on settlement tools. If you’d like to receive more information on structuring an MSA or a link to the recording, please email your request to Dan Anders at firstname.lastname@example.org.