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Approval of this settlement by Medicare is not required. This answer
is based on the following facts that were established during the question
and answer session:
1) The settlement is closing the claimant's rights
to future medical benefits that would otherwise be payable under the
workers' compensation claim.
2) The claimant is not currently eligible
for Medicare.
3) The total settlement $250,000 or less.
If a claimant has a reasonable expectation of Medicare enrollment within
30 months of the settlement date and the anticipated total settlement
amount for future medical expenses and disability/lost wages over the
life or duration of the settlement agreement is expected to be greater
than $250,000, then approval by CMS of the workers' compensation settlement
is required. CMS refers to this type of beneficiary as a Class II beneficiary.
Claimants who do not satisfy this threshold need not submit their settlements
to CMS for approval. However, CMS made clear in its July
11, 2005 memo that this threshold is a "workload threshold" and not a substantive "safe
harbor" threshold. All settlements are required to set-aside sufficient
funds in the settlement to protect Medicare from reasonably anticipated
Medicare covered medical expenses.
Both conditions must be met in order
to fall within the threshold. In other words, if the claimant is expected
to become a Medicare beneficiary within 30 months but the total settlement
is less than $250,000, then a CMS-approved Medicare set-aside arrangement
is unnecessary. See the May 23,
2003 CMS memo, Q&A1. Prior to July
11, 2005, CMS assumed that when a non-Medicare settlement does not meet
the 30-month/$250,000 threshold, that individual will completely exhaust
his or her settlement by the time Medicare eligibility is reached. See
the April 22, 2003 CMS
memo, Q&A3. In its memo
of July 11, 2005, CMS reversed this approach and stated that any funds from a workers'
compensation settlement attributable to future medical expenses that are
remaining at the time the claimant becomes Medicare eligible must be used
to pay for Medicare-covered expenses. Only then will CMS pay for Medicare-covered
expenses.
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