Disability Law

MSA Update - 3C: Structured Settlement Annuities

By Patrick Hindert

This S2KM blog post is the sixth in a series of S2KM blog posts in 2008 updating Medicare set-aside (MSA) developments that impact the growth of structured settlements.

S2KM's previous posts about MSAs include:

• Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA)
• MSA Update - 1: Historical Background and Recent Developments
• MSA Update - 2: CMS Rules for Structured Settlements
• MSA Update - 3A: Interview with Thomas Spratt A
• MSA Update - 3B: Interview with Thomas Spratt B

John Campbell and other NAMSAP members have thoughtfully pointed out to S2KM that CMS has distributed a new policy memo dated August 20, 2008 that appears to conflict with its earlier May 20, 2008 policy memo related to life expectancy. As of today's date, CMS has not yet posted online the August 20, 2008 policy memo with its earlier WCMSA policy memos which are available for download on this CMS website.

The May 20, 2008 CMS policy memo is addressed to "Consortium Administrator for Financial Management and Fee-for-Service Operations". It states, in part:

"Effective with WCMSA submissions received by CMS' Coordination of Benefits Contract on or after July 1, 2008, CMS will only accept life expectancies obtained from the CDC [Centers for Disease Control] Table 1, Life table for the total population. The CMS will only use the CDC Table 1 in its WCMSA review process."

The May 20, 2008 CMS policy memo does not mention annuities or structured settlements or rated ages.

The August 20, 2008 CMS policy memo is addressed to the same "Consortium Administrator". It states, in part:

"To protect the Medicare Trust Fund, a set-aside relationship should be funded based upon the life expectancy of the individual unless the State law specifically limits the length of time that WC covers work-related conditions. Unless a submitter furnishes acceptable proof of a Rated Age for a claimant, CMS will estimate the claimant's remaining life expectancy using Actual Age. Acceptable proof of Rated Ages includes independent rated ages on the letterhead of an insurance carrier or settlement broker and a statement from the submitter that all rated ages obtained on the claimant have been included."

Industry issues:

• How will CMS regional offices and contractors interpret these two recent policy memos?
• How do these two policy memos impact the growth of structured settlements?
• How do the developing CMS rules for structured settlements impact industry growth?

Learning resources:

• Release 44 of "Structured Settlements and Periodic Payment Judgments" (S2P2J) features an update for MSAs and the Medicare Secondary Payer (MSP) rules.
• MSA Update-2 summarizes existing CMS rules for structured settlements and WCMSAs.
• Thomas Spratt's Interview B highlights challenges and advantages for the structured settlement industry specific to MSAs and rated ages.
• NAMSAP will host its 2008 Annual Meeting October 2 in Washington, D.C.

S2KM will continue to report MSA developments that impact the growth of structured settlements in S2KM's blog and structured settlement wiki.

Full post as published by Beyond Structured Settlements on September 09, 2008 (boomark / email).