Attorney William Lowry recently wrote about workers’ compensation insurance considerations when Illinois employees are working abroad. The blog post may be found here. This blog will look at situations involving tangential issues, i.e. workers’ compensation settlements with future medical allocations or Medicare Set-Asides (MSAs) that will be spent overseas.
Although most workers’ compensation settlement funds are spent in the US, there is a certain subset of settlement involving claimants who intend to use their settlement funds overseas where medical care will be established. These arrangements may be temporary or permanent in nature. When faced with a claimant who falls into this category, the issue of whether to fund a future medical allocation or MSA in connection with the settlement may become muddled. The different factors that may impact your decision are examined below.
Any workers’ compensation settlement that closes out future medical benefits should avoid a cost shift of future injury related expenses to Medicare. This is due to Medicare’s status as a secondary payer when a primary payer with a demonstrated responsibility for payment is available (42 U.S.C. Section 1395y(b)(2)). In deciding whether to fund a future medical allocation or MSA in connection with a settlement where the claimant has indicated he will be leaving the country, the following factors should be considered:
- The nature of the injury and likelihood of future treatment. A soft tissue injury with two physician visits and two weeks of lost time is different than a low back injury that resulted in a failed back syndrome with ongoing medication management.
- The number of credits or quarters the claimant has earned by paying Social Security and Medicare taxes. Would the claimant be eligible for Medicare on a spouse’s record if he returned to the US?
- The claimant’s Medicare status at time of settlement.
By considering the above factors, the decision to include or exclude a sum for future medical, regardless of where the medical treatment is to be provided, will have a sound basis for it. For example, an employer who is engaged in settlement discussions with a Medicare beneficiary that intends to permanently relocate overseas for medication management, may not wish to pursue CMS’ voluntary review of an MSA. A future medical allocation formulated on an evidence-based medicine model for drugs rather than CMS’ projection methodology may be a better option in the case since the benefit of CMS’ review may be of little value given claimant’s plan to move. It is prudent, however, for the claimant to apportion some of his settlement for future injury related medical expenses should he decide to ever seek treatment in the United States.
A secondary issue also arises regarding the use of MSA funds for treatment overseas. If a claimant has moved overseas and has access to his MSA funds, there should not be any prohibition against their use for injury related medical treatment that is like that covered by Medicare in the US. This position is supported by Medicare’s acknowledgement that MSA funds may be properly spent before a claimant becomes a Medicare beneficiary. In both above scenarios, the claimant does not have access to Medicare covered treatment. The expenditures from the MSA funds should be properly accounted for in case the claimant returns to the US in the future.
It is important to note that the parties’ obligations to address Medicare’s conditional payments prior to settlement and to comply with mandatory Section 111 reporting are not impacted by a claimant’s relocation abroad. The failure to address these obligations may have ramifications against both the claimant and the primary payer. Although a claimant’s plan to move overseas after settlement may muddy the issues when it comes to setting aside funds for future medical treatment, our team of Medicare Secondary Payer compliance attorneys is available to assist you with your analysis.