As a general rule federal law requires parties involved in workers’ compensation claim to consider Medicare’s interests in the event of a settlement. 42 CFR 411.46. However there is one major exception to this rule. According to the October 15, 2004, policy memorandum issued by the Center for Medicare and Medicaid Services (CMS) workers’ compensation parties need not consider Medicare’s interest when the medical aspects of a claim are to remain open.
In layman’s terms leaving medical open simply means that the employer will continue to pay for an injured worker’s medical treatment long after the settlement funds are dispersed. There are many reasons an employer might choose to keep medical open. In my experience this usually happens when the injured worker’s medical treatment is extremely costly or his medical condition indicates a possible shortened lifespan. In any case, parties involved in a compensation case where the employer has agreed to continue to pay medical bills do not need to worry about Medicare or creating a Medicare set-aside.