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  • Writer's pictureAcclaim Law Group

An Introduction to Medicare Set Asides

Reaching a settlement is typically grounds for celebration. The fight is over, your pain and suffering has been addressed, and your voice has been heard. However, settlement does not always equate to a finish line.

If you are a Medicare beneficiary, settlement signals the beginning of establishing a Liability Medicare Set Aside (LMSA) or a No-Fault Medicare Set Aside (NFMSA). Medicare Set Asides are an “allocation of funds from a liability or an auto/no-fault related settlement, judement, award… used to pay for an individiuals future medical and/or future prescription drug treatment expenses that would otherwise be reimburseable by Medicare.”[1] While the journey to setting up a Medicare Set Aside is not yet clearly outlined, the course to obtaining approval of an alloted amount for your Set Aside can delay the transfer of settlement funds.

Medicare Set Asides are created to protect Medicare’s interest. As Medicare is a government health insurance program designed to assist the elderly and primarily funded through federal taxes, protecting the program’s interest is vital to ensure the program’s survival. Accordingly, Medicare is considered a secondary payer if health insurance, liability insurance, or no fault insurance is available. So once a settlement has been awarded a Medicare Set Aside acts as health insurance and becomes the primary payer of healthcare until all funds have been exhausted.

Current rules outlining the proper way to notify Medicare of a pending liability or No-fault case require individuals to notify the Medicare BCRC office as soon as they know a case is pending. Once the case has been reported and all injuries have been disclosed, BCRC scans through the a Medicare beneficiary’s medical records to determine if any care obtained was related to the beneficiary’s case. If any records are found that are considered related, Medicare then seeks reimbursement from the settlement. This reimbursement can be negotiated based on the settlement amount the Medicare beneficiary is receiving. In some cases, if the settlement is small, reimbursement may be waived.

As Medicare works to complete a clear outline of how individuals should create LMSAs and NFMSAs, Medicare reimbursement remains the primary source of Medicare collections. By law, Medicare Beneficiaries and/or any responsible reporting entity with knowledge of a Medicare Beneficary’s settlement must report the settlement to Medicare. Failure to comply with Medicare’s law can result in  “a discretionary fine of $1,000 per day, per claim,” recovery of “conditional payments from any person who receives a portion of the payment (the beneficiary and his/her attorney) or any person who is responsible for making the payment (the insurer, the insured, or self-insured entity),”  and gives CMS the ability to “sue for double damages (twice the lien amount) plus interest.”[2] Therefore, compliance with Medicare is in the best interest of all parties involved.

To learn more about Medicare Reimbursement and Medicare Set Asides call Brett Geruntino, Esq. at Acclaim Law Group at (858) 252-0781.

Disclaimer: While we always seek to establish accuracy when publishing articles, this piece is not intended to provide legal advice, and should not be used as such. Each individual case will differ and should be discussed with an attorney or legal expert. If you would like to inquire about pursuing a claim, please contact us at (858) 252-0781 or email

[1] (DHHS), D. o. (2017, February 3). New Common Working File (CWF) Medicare Secondary Payer (MSP Type for Liability Medicare Set-Aside Arrangements (LSMAs) and No-Fault Medicare Set Asside Arrangements (NFMSAs). Retrieved from

[2] Jeremy Edelson, L. M. (n.d.). ABA Section of Labor and Employmment Law. Retrieved from

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