Workers’ Compensation (WC) is the program that compensates workers for occupational injuries. Injured workers eligible for WC benefits may also be or become eligible for Medicare. They may have reached age 65 or they may have a disability which qualifies them for coverage under the Social Security Disability Insurance program. To preserve Medicare funds, the Medicare Secondary Payer Act (the MSP Act), appropriately provides that Medicare is secondary to other sources of payment for medical care, including applicable WC medical benefits.
Most state WC laws allow final settlements of all benefits, which normally close the claim. The worker then has no right to additional WC benefits in the future, and the employer/insurer has no further financial obligation. Most states provide for review of the settlement by a court or administrative agency to ensure that it is in the claimant’s best interests. Funds from the settlement for future medical expenses are sometimes included in the settlement and used for future medical expenses resulting from the occupational injury. Sometimes this occurs after a person is eligible for Medicare. Medicare, without authority, is demanding that these funds be set aside in trust for the future medical expenses during years of Medicare eligibility.
This demand has led to unprecedented disruption and, confusion among practitioners, tribunals, employers, claimants and payers. This demand has added substantially to transaction costs and up to one year of delay in implementing settlements. Also, past claims closed by settlement, representing hundreds of billions of dollars, are subject to substantial uncertainty as the future action of the Centers for Medicare and Medicaid Services (CMS) is not reliably fixed and determined.