Should You Administer Your Own MSA?   What Would Be Your Responsibilities?

Injured parties:

• Are only allowed to spend their MSA funds on Medicare-covered treatments related to their injury.
• Must place MSA funds in a separate, interest-bearing bank account. You cannot commingle MSA funds with other personal funds.
• Must keep copies of bills & receipts
• Must report all expenses they used their MSA funds on to the Centers for Medicare and Medicaid Services ('CMS") each year and in the case their funds run out
• Must only pay the state fee schedule or "usual and customary" pricing for treatments & prescriptions
• Think about it. Can you handle this?

There are a number of complex rules to follow in the administration of MSAs. These are detailed in CMS' WCMSA Reference Guide and its Self Administration Toolkit. If you self-administer it is your responsibility to stay up to date. An administrator, like Ametros, offers products to ensure your account is used and reported properly. CMS "highly recommends" the use of a professional administrator.

The most basic rule to keep in mind is that the injured party is only allowed to spend their MSA funds on Medicare-covered expenses directly related to their injury. Secondly, the injured party needs to keep track of all the expenses to report to Medicare that they used the funds properly. This is important so that, in the case the MSA funds run out, Medicare will agree to begin coverage for injury-related treatment.

To provide more detail step by step: the MSA funds must be placed in a separate, interest-bearing bank account.

Source: Ametros

Who Pays the Income Taxes on Accrued Interest in the MSA?

Interest on funds held in an MSA account (whether self-administered or professionally administered, is attributed to the claimant/plaintiff, who receives an IRS form 1099-INT after the end of each calendar year. The interest on funds held in an MSA is considered taxable income and must be reported by the claimant/plaintiff on his or her Form 1040 or 1040-EZ, when they file their tax return.. The MSA account can however, provided the funds to pay any income taxes due on income generated in the MSA. In other words,  the MSA can reimburse the claimant/plaintiff for its share of taxes and this reimbursement is not considered income by the IRS.  CMS does permit payment of taxes from the MSA. There should be adequate documentation of the tax for the annual accounting of the MSA. Support can be found in the 7/11/2005 CMS Memo Q6.

Need more info about Workers Compensation Medicare Set-Asides?

CMS publishes a lot of helpful information about worker's compensation MSAs. 

WCMSA Self-Administration Tool-Kit.

WCMSA Reference Guide v4.0 April 2024

Can you Sell the Payment Rights in a Structured MSA?

Selling workers' comp structured settlement payments

• sale of workers compensation structured settlement payments may be prohibited in some states
• may be opposed by the workers compensation board
• may not be in your best interest if you are a Medicare beneficiary and Medicare has been paying for work related injuries.

I've Been Offered a Structured MSA with Seed Money, a Temporary Life Annuity and No Cash

If you have been adjudicated as having a permanent total injury, keep negotiating.  The settlement offer does not put you in a better position.

MMSEA Reporting  CMS Update

MMSEA S111 GHP Alert (cms.gov) February 23, 2024 update

NGHP User Guide - Chapter III Policies v. 7.5 April 1, 2024 Q2 Release (cms.gov)

Medicare Secondary Payer (MSP) Mandatory Reporting Provisions Section 111 of the Medicare, Medicaid, and SCHIP Extension Act (MMSEA) of 2007 (See 42 U.S.C. 1395y(b)(7)&(b)(8)) Technical Alert: Change to Worker’s Compensation Reporting

Last updated April 1, 2024

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