Medicare Set-Aside

A Medicare set-aside is a portion of a settlement reserved to pay for future medical care related to the injury that Medicare would otherwise cover. It is meant to protect Medicare's position as a secondary payer, so the person spends that money on related care before Medicare pays.

Origin

Set-asides developed in workers' compensation in the early 2000s, when the federal Medicare agency issued guidance and created a voluntary review process for compensation settlements. For liability settlements, the agency has discussed set-asides but has not adopted a formal review process, so practice developed through guidance and caution.

Significance in Asbestos Context

Set-asides are most common in workers' compensation settlements, including occupational disease claims for asbestosis, where the agency's review thresholds and guidance apply. In asbestos lawsuits and trust claims, a formal set-aside is less common, and whether one is needed depends on the case: the claimant's Medicare status, whether the settlement pays for future medical care, the disease and treatment outlook, and the terms of the release. Some releases simply state how future medical care has been considered; others allocate money to a separate account, sometimes managed by a professional administrator. When a set-aside is used, the money must be spent only on related care that Medicare would cover, with records kept, until it runs out. Because the rules are not fully settled for liability cases, lawyers, defendants and Medicare specialists often negotiate the approach. A set-aside is separate from repaying past conditional payments, which is required under the Medicare Secondary Payer Act.

Example Sentence

His workers' compensation settlement for asbestosis included a Medicare set-aside to cover future pulmonary care and oxygen.

Related Terms

Medicare Secondary Payer Act, Lien, Release, Workers’ Compensation, Economic Damages

Notes

• Ask your lawyer whether your settlement needs a set-aside and why, in plain terms.
• If you have a set-aside, keep receipts for every payment from it; Medicare can ask for an accounting.
• A set-aside is not a penalty; it is money set aside for your own related care.