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A Medicare Set Aside ("MSA") is a fund of money
"set aside" from a total settlement amount used to pay
Medicare for future medical treatment related to a claim. More
specifically, MSAs are used to pay future medical expenses related
to the injury that would otherwise be payable by Medicare as a
secondary payer. The amount of an MSA is determined on a case
by case basis, taking into consideration the injury, treatment and
age of the claimant, among other factors. A MSA can be created
by depositing cash in a specially designed account or through the
creation of structured settlement annuity.
On March 9, 2012, an Illinois appellate court addressed the
unique issue of whether a workers compensation claimant's
ex-wife was entitled to a portion of his MSA for his work-related
injury.
The case, In re Marriage of Christopher Washkowiak and Rosana
Washkowiak, involved a couple who married in 2004 and filed for
divorce in 2009, roughly one year after Mr. Washkowiak suffered an
injury while working for Northern Pipeline Construction Co. Inc.
("Pipeline"). Mr. Washkowiak reached a $435,000
settlement agreement with Pipeline, which included a $70,000
MSA. The MSA was established as an interest-bearing bank
account funded to pay for future medical and prescription drug
costs anticipated to arise from Mr. Washkowiak's work
injury.
During the divorce proceedings, a dispute arose over whether
Mrs. Washkowiak was entitled to a portion of the $70,000
MSA. Mr. Washkowiak argued that the MSA funds were not net
proceeds from his settlement with Pipeline but rather, funds set
aside solely to satisfy Medicare's interests. The trial
court disagreed and found the $70,000 set aside amounted to
"net proceeds" which should be included in calculating
Ms. Washkowiak's share of the marital assets. The
3rd District Appellate Court of Illinois agreed with the trial
court, finding the $70,000 are to be considered "net
proceeds." Further, the Court noted Mr. Washkowiak can
replace the money taken from the MSA with the remainder of his
$435,000 settlement that did not originally flow into the
MSA.
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