A Look into the Methods of MSA Funding and Administration
When settling a claim involving a Medicare beneficiary or an individual who will soon be eligible or Medicare, Medicare Set-asides are used to provide the injured person with funds to pay for future medical treatment of the injury at issue that would otherwise be covered by Medicare. The amount of the MSA is typically determined by having an MSA allocation report prepared or by self-allocation. Once the MSA amount has been determined, it is time to consider how the MSA will be funded and who will administer the funds.
MSAs can be funded in a lump sum or by utilizing an annuity. When the MSA is funded in a lump sum, the full amount will be placed into the MSA at the time of settlement. If an annuity is used, however, the MSA will initially be funded with seed money. An annuity will also be purchased to provide annual payments into the MSA account. Annuities are often the preferred funding method due to the savings they provide. Annuities also provide both parties with security, by guaranteeing that funds will be available to cover treatment of the underlying injury for years to come.
Administration of the MSA can be handled by a professional company or by the claimant. The administrator is responsible for ensuring that the MSA funds are properly spent, paying only for Medicare-covered treatment and medications related to the underlying injury. The administrator must also keep a detailed accounting and, if CMS approval was obtained, submit an annual attestation to Medicare. These responsibilities can be overwhelming for claimants, especially in cases with larger MSAs or extensive ongoing treatment. In these situations, it is likely in all parties’ best interest to consider the use of a professional administrator. Professional administrators take the burden of managing the MSA funds off the claimant. The funds often last longer too, as professional administrators have access to discounted treatment, medications, and durable medical equipment.
The methods of funding and administration are important issues to evaluate when funding an MSA. We are available to help you analyze the options and determine the best method for your claims. We can also assist in finding a structured settlement broker from whom to purchase an annuity and connect you with companies that provide professional administration services. Please let us know how we can help!