What are the Biggest Medicare Set-aside (MSA) Mistakes?

Medicare set-asides are a critical component of many settlements. After settlement, the injured party must spend, track and report the Medicare set-aside carefully and in accordance with the guidelines provided by the Centers for Medicare and Medicaid Services. However, those not familiar with Medicare set-asides are prone to make mistakes. Reporting is complex and if the injured party fails to do so properly, he or she runs the risk of having their Medicare benefits denied. Additionally, paying retail rates for medical treatment can indicate he or she is not abiding by the guidelines and, thus, will quickly exhaust their funds prematurely. If you need help avoiding the biggest Medicare set-aside mistakes, please read on, then contact our team today. Mistakes to avoid include:


When an injured party handles MSA funds on their own, they pay retail prices on drugs, doctors visits, procedures and medical equipment. In most states, Medicare guidelines indicate that the injured person should pay the lower workers’ compensation state fee schedule for treatment, even after settlement. If the injured party does not have the ability to properly reprice bills, they will be overpaying.

Assuming that, when you have exhausted all funds, Medicare or private insurance will automatically cover all healthcare costs

Even after the injured person exhausts their MSA, they remain responsible for copays and deductibles. This is true even if Medicare or a private insurer is picking up the bill. This assumption may lead an injured party to overpay and have to resort to personal funds.

Failing to enroll in Medicare or private insurance altogether

Many injured individuals incorrectly assume that having an MSA means they are automatically on Medicare. They still need to enroll in Medicare or private insurance to have coverage if their funds run out. Medicare requires you to enroll in plans B, C or D and if you do not, you will have to pay 100 percent of all healthcare costs.

Using MSA funds to pay for copays, deductibles, premiums or administrative fees

Medicare guidelines explicitly state that you may not use MSA funds to pay for copays, deductibles, premiums or administrative fees. Failure to adhere to these guidelines may result in you having to repay Medicare.

Failure to coordinate with providers and pharmacists on which items to bill to the MSA versus Medicare or a private insurance plan

Staff at most pharmacies and doctors’ offices have never heard of an MSA, so expect some confusion about billing. An individual managing their own MSA is responsible for:

  • Verifying that only injury-related care is paid from the MSA,
  • Routing unrelated bills to Medicare or an insurance plan
  • Researching all bills to make sure they are covered by Medicare,
  • Making sure that they pay every bill properly with the MSA funds, and

It may sound simple but often the injured person will visit the pharmacy to pick up medications that the MSA should cover as well as medications that should go to the health insurance company or Medicare. You must be very specific with healthcare providers and staff to ensure that they are separating bills.

Not Keeping Receipts for all Bills Paid and Forgetting to File An Annual Report with Medicare.

Medicare places a flag on your file and will not pay any bills for your injury until you have proven that all MSA funds have been properly spent. This means keeping a copy of all bills paid and filing an annual self-attestation form with CMS-the part of Medicare that monitors MSAs.

Contact MSA Meds

These are just the tip of the iceberg in terms of mistakes involving MSAs. Even the simplest can cost you dearly. Contact MSA Meds today for help protecting your Medicare benefits.