Medicare Set-Aside Funds Excluded From Medicaid Eligibility Determination

A North Carolina appeals court holds that a workers’ compensation Medicare set-aside account is not a countable resource for purposes of determining Medicaid eligibility because the funds are subject to restrictions arising from a legally binding agreement.  Williford v. North Carolina Department of Health and Human Services (N.C. Ct. App., No. 16-393, Nov. 15, 2016)

Phoebe Williford was injured at work in November 2005, after which she received workers’ compensation medical and disability benefits from her employer.  Following several years of medical treatment for her injuries, Ms. Williford and her employer agreed to a mediated settlement pursuant to which the employer would pay $46,484.12 into a Workers Compensation Medicare Set-Aside Account (WCMSA).  The terms of that agreement were incorporated into an order entered on April 19, 2011, by the North Carolina Industrial Commission (IC).

In November 2009, when Ms. Williford turned 65 years of age, she applied for and received assistance with her medical expenses under Medicaid.  In December 2013, the local Medicaid agency terminated her benefits on the grounds that the funds in her WCMSA were a countable resource, taking her above Medicaid's asset limit.  Ms. Williford appealed to the North Carolina Department of Health and Human Services (DHHS), which affirmed the agency’s decision, as did a trial court’s judicial review of the matter.  Ms. Williford appealed again.

The Court of Appeals of North Carolina reverses the trial court’s order, concluding that the WCMSA is not a countable resource. Reviewing the purpose of Medicare set-aside accounts under the Medicare Secondary Payer provisions and the express terms of the IC’s legally binding order of April 2011, the court concludes that Ms. Williford could not use the funds for general support and maintenance.  Rather, the IC’s order expressly stated that the WCMSA funds would be used only for medical expenses arising from her work-related injuries for which Medicare would otherwise be liable.  That language expressly creates legal restrictions on her use of that resource, the court holds. 

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