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A workers’ compensation settlement can resolve the active claim even when medical needs continue for years. Future care may include medication, office visits, injections, therapy, diagnostic testing, surgery, or medical equipment connected to the work injury. The parties must understand who will carry financial responsibility for that care after the settlement becomes final. Medicare Set-Asides enter the discussion when Medicare’s interests need protection within that future medical planning. Careful preparation helps the settlement create clarity for the employee and confidence for everyone responsible for bringing the claim to resolution.
The Centers for Medicare & Medicaid Services defines a Workers’ Compensation Medicare Set-Aside Arrangement as a financial agreement that allocates part of a workers’ compensation settlement to future medical services related to the work injury, illness, or disease. The arrangement operates within the Medicare Secondary Payer framework because workers’ compensation carries primary responsibility for covered work-related care before Medicare. When CMS approves an allocation and the account is appropriately exhausted, Medicare will pay Medicare-covered medical expenses related to the settled condition when the beneficiary continues to require care. The amount is developed case by case using the medical evidence and settlement circumstances presented. A thoughtful allocation connects anticipated treatment with a reasonable estimate of the Medicare-covered expenses being resolved through the settlement.
The analysis should begin early enough for the team to understand the employee’s Medicare status and potential path toward enrollment. Claims professionals also need a clear picture of the benefits being resolved and the total value of the settlement. Current treatment recommendations, prescription history, diagnostic findings, prior procedures, and anticipated follow-up care help define the future medical exposure. Missing or outdated records can make the allocation harder to evaluate and may delay the review process. Early planning gives the parties time to develop reliable information before negotiations reach their final stage.
Medical records provide the foundation for the allocation because future care must connect with the conditions and services addressed through the settlement. A recommendation for another surgery creates a different projection from a record showing stable function with limited follow-up needs. Prescription medications also deserve careful attention because frequency, dosage, duration, and cost may change over the employee’s life expectancy. The allocation professional needs enough clinical information to identify the services Medicare would ordinarily cover and the treatment workers’ compensation is resolving. Precision strengthens the settlement by giving the future medical plan a clear relationship to the evidence.
CMS offers a voluntary review process for proposals meeting its workload review thresholds. CMS will review a proposed allocation when the claimant is a Medicare beneficiary and the total settlement amount is greater than $25,000. CMS will also review a proposal when the claimant has a reasonable expectation of Medicare enrollment within 30 months and the anticipated total settlement amount for future medical expenses and disability or lost wages over the life of the agreement is greater than $250,000. These thresholds determine whether CMS will review the proposal and serve as workload-management tools rather than safe harbors. Medicare’s interests still require consideration in workers’ compensation settlements that fall below the current review thresholds.
The voluntary nature of the review process deserves equal attention. CMS confirms that no statute or regulation requires every proposed allocation to be submitted for approval. Parties choosing to use the CMS review process must follow the agency’s established policies and procedures. A proposal meeting the workload thresholds can be submitted electronically through the WCMSA Portal or sent through the approved mail process. CMS recommends electronic submission because the portal provides a more efficient pathway for review.
Once submitted, the proposal enters a centralized review process and is forwarded to the Workers’ Compensation Review Contractor. The contractor evaluates the settlement information, medical records, future treatment, prescription needs, pricing, and proposed allocation. Missing documents or inconsistencies can lead to requests for additional information and extend the time required to complete the review. CMS then issues its determination based on the completed evaluation. An organized submission carries greater credibility because reviewers can follow the medical evidence through the calculation and understand how the proposed amount was developed.
Current guidance matters because CMS continues to update the materials supporting the WCMSA process. The agency published Version 4.6 of the Workers’ Compensation Medicare Set-Aside Reference Guide on July 13, 2026. The guide consolidates CMS policies, submission expectations, review procedures, and administration requirements into one primary source and directs users away from relying on prior memoranda. The Version 4.6 revisions updated language in two sample letters and changed a fax number rather than introducing a major policy shift. Claims professionals and settlement teams should still confirm that they are using the latest CMS resources because thresholds, operational procedures, and supporting materials can change.
Planning continues after the allocation amount is established because the funds must be administered correctly. When state law allows, a claimant may self-administer the WCMSA or use a professional administrator. Self-administration requires accurate recordkeeping and careful use of the funds for Medicare-covered medical and prescription expenses related to the settled work injury, illness, or disease. CMS highly recommends that settlement recipients consider professional administration because the responsibilities continue across the life of the account. The administration choice should reflect the employee’s ability and willingness to manage those obligations after the active claim has concluded.
Annual reporting adds another responsibility to the administration process. The account administrator must maintain accurate records of payments because CMS may request proof that the funds were used appropriately. Beginning no later than 30 days after the first anniversary of the account, the administrator must submit an annual attestation concerning the medical and prescription expenses paid from the WCMSA. Reporting continues until the account is permanently depleted and a final attestation is completed. These requirements make administration part of the settlement strategy rather than an administrative detail addressed after the agreement is signed.
Communication with the employee becomes essential because the arrangement will influence future access to care. The employee needs to understand which expenses may be paid from the account and why receipts, statements, and other records must be preserved. The person also needs clear guidance concerning what happens when funds are temporarily or permanently exhausted and how Medicare coverage may respond. A settlement can provide financial certainty and still introduce responsibilities that feel unfamiliar to someone managing an injury. Thoughtful explanation helps the employee evaluate administration options and prepare for the years following the settlement.
Medicare Set-Asides also require coordination among claims professionals, attorneys, treating providers, allocation specialists, and administrators. The claims professional understands the history and financial development of the file. Medical records describe the treatment delivered and the care anticipated for the future. Legal counsel evaluates the settlement structure and the responsibilities created through the agreement. Specialized Medicare professionals bring focused knowledge of current CMS procedures and can identify information that needs clarification before the settlement moves forward.
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