Future Medical Cost Estimates Required for Lump Sum Settlements

December 2007

The Workers’ Compensation Board has adopted a Rule which requires Hearing Officers to make a determination regarding expected future medical costs related to the injury before approving a lump sum settlement and releasing an employer’s liability for future medical expenses. The change is reflected in Chapter 12(6)(2)(B) of the Workers’ Compensation Board Rules. Now the parties must be prepared to present evidence regarding anticipated future medical costs.

A Medicare Set-Aside Allocation (MSA) is one way to satisfy at least part of this burden. An MSA is already required anytime the employee is a current Medicare beneficiary or if the employee is eligible for Medicare within 30 months of the date of settlement and the total amount of the settlement, including indemnity, is greater than $250,000.00. In addition, if the employee is on Medicare and the amount of the total settlement is greater than $25,000.00, the Center for Medicare Services (CMS) must approve the MSA. MSA’s relate only to Medicare related expenses, but the allocation reports often include estimates of non-Medicare expenses. In all likelihood, in non-MSA cases, a simple statement of the amount of future expenses, supported by a medical opinion, will suffice.