Allocation Companies

Описание: Allocation Companies
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According to the MSP Act, one way to take Medicare’s interest into consideration is to establish a Medicare Set-Aside account, or MSA. But exactly how much should be set aside? The amount just can’t be an arbitrary number. The settling parties must take steps to ensure adequate funding of the MSA. That’s where an MSA allocation comes into play.

An allocation company will prepare a detailed report that breaks down all the anticipated future medical and prescription drug expenses over the designated life expectancy of the injured person. This report contains a total dollar amount believed to be sufficient to cover these needs. It should also include an alternative to paying the full amount in cash. The alternative, a structured MSA, outlines the initial payment for seed money, as well as the amount of subsequent annual payments to properly fund the account.

The allocation report can then be submitted to the Centers for Medicare and Medicaid Services (or “CMS”). CMS will review the report and respond with an approval letter. Within that letter, CMS will either:

Confirm that the amount recommended by the allocation report is sufficient, or
State that a different amount is needed to take Medicare’s interests into consideration.

The allocation report or CMS approval letter will state a total dollar amount. This can either be paid all at once in a lump sum; or as a structured MSA. The combination of cash and annual payments in the structured MSA equals the approved amount.

Because they preserve the integrity of these accounts, CMS recognizes structured settlements as a secure way to fund MSAs.