The Medicare insurance program provides federally funded health coverage for people age 65 and older, as well as people with certain disabilities. Medicare set-aside allocations have to do with specific guidelines that dictate how benefits are distributed when a person has other forms of health coverage. These guidelines impose strict penalties for Medicare beneficiaries, as well as for other insurance carriers who attempt to abuse the Medicare program.
Workers' Compensation Settlements
Medicare set-aside allocations often appear as settlement proposals in cases involving workers' compensation claims. According to the Care Planner Network, set-aside allocations specifically identify Medicare's role in covering a worker's medical expenses and lays out time lines for payment, as well as payment amounts. Workers' compensation plans typically involve the insurance carrier that sponsors an employer's health plan. Under Medicare guidelines, where another insurance carrier exists, Medicare becomes the secondary coverage provider. This means that benefits from the employer's insurance carrier must first be used up before Medicare coverage begins. Medicare imposes set-aside allocation penalties when beneficiaries or other insurance carriers attempt to abuse Medicare coverages, either by generating double payments or by using Medicare as a primary coverage provider.
Medicare Allocation Guidelines
A Medicare set-aside allocation proposal identifies the extent of an employee's injuries and the amount of time and treatment needed along with any associated costs, according to the Care Planner Network. Proposals also identify when an employee's Medicare coverage becomes active over the course of the stated settlement period. The Medicare Integrity Program Act of 1996 imposes strict guidelines on Medicare's coverage within the settlement process. Settlement proposals are drafted by attorneys, insurance companies and employers, all of whom must adhere to Medicare's allocation guidelines or risk being penalized for violating the law.
Settlement Administration
Once the terms of a workers' compensation settlement are laid out, an administrator is assigned to carry out the terms of the agreement. Part of this process involves setting up a Medicare fund, or account which holds the monies that cover Medicare's role, or portion within the settlement agreement. According to the Care Planner Network, employees can opt to self-administer a settlement or hire a professional administrator. Administrator duties involve issuing health insurance cards, processing all medical billing paperwork and submitting yearly reports to the Centers for Medicare and Medicaid Services, or CMS. Allocation penalties occur when administrators attempt to use Medicare funds to pay for noncovered services or pay for treatments that should have been covered by the employee's primary health insurance carrier.
Penalty Terms
Under the Medicare Secondary Payer Statute passed in 1980, Medicare has the right to disregard any settlement agreement that does not protect Medicare's interests or abide by its role as a secondary health insurance carrier, according to the Care Planner Network. In cases where the administration of a settlement violates these terms, Medicare reserves the right to impose penalties on the claimant, or employee, the primary insurance carrier, attorneys, as well as on the administrator of the settlement. Penalties can amount to double the damages of the original settlement and result in the loss of Medicare coverage for the claimant.
