SSDI, Medicare and MSAs

I recently received a question from a defense attorney who called to ask me to explain how these six programs work and interrelate: SSDI, Medicare, MSAs, SSI, Medicaid, and SNTs. After giving my answer, it occurred to me that others might have the same question. I will review the first three programs here and the rest in my next blog:

SSDI (Social Security Disability Income) is a federal disability insurance program funded by payroll taxes. It pays a monthly benefit to people who have worked in the past and have paid Social Security taxes, and are now unable to work for a year or more because of a disability. There is a five month waiting period before benefit payouts begin.

Medicare is a federal health insurance program that is funded by payroll taxes, self-employment taxes and premiums. It pays for hospitals (Part A), doctors, outpatient and durable medical equipment (Part B) and prescription drugs (Part D). Most people will pay a premium for parts B and D. Individuals become eligible for Medicare at age 65 or at any age if they have End Stage Renal Disease. Medicare insurance is also provided to all SSDI recipients after they complete a 24-month waiting period.

A Medicare Set-Aside (MSA) is Medicare’s preferred method to protect Medicare from paying future medical bills that settlement money should pay. A portion of the settlement money is “set-aside” in a separate bank account and spent down on future injury-related, Medicare-allowable expenses. MSAs are used in workers’ compensation and liability cases to protect Medicare as the secondary payer.

These three programs relate to each other. Five months after an injury occurs, the injured person may qualify for SSDI benefit payments. Then, after a 24-month waiting period, he/she will automatically become eligible for Medicare. However, by law, Medicare is secondary and cannot pay if there is a primary insurer. So if an insurance settlement occurs, the future medical part of the settlement money will be set-aside in an MSA account and spent on injury related, Medicare allowable expenses. Then if the MSA money runs out, Medicare will pay for those medical bills.

Medivest specializes in the area of Medicare Set Asides and we can assist you in referrals to Elder law attorneys and/or Social Security attorneys, if expert assistance in the other programs is needed.


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