Beyond Structured Settlements

NAMSAP 2016 Annual Conference

The National Alliance of Medicare Set-Aside Professionals (NAMSAP), "the only non-profit association exclusively addressing the issues and challenges of the Medicare Secondary Payer (MSP) Statute and its impact on workers’ compensation and liability settlements", hosted its 2016 Annual Conference September 14-16 in San Antonio, Texas.

NAMSAP, which also seeks and welcomes opportunities to help improve Medicare set-aside (MSA) industry standards for documentation, work product and business practices, encompasses a highly diverse professional membership consisting of attorneys, MSA allocators, MSP compliance consultants, CPAs, claims professionals, structured settlement consultants, guardians, nurses, pharmacists, rehabilitation professionals, and life care planners.

As S2KM has observed in reports about past NAMSAP conferences (see links below), the combination of membership diversity, subject matter complexity, legislative and regulatory developments plus an expanding MSA market create extraordinary challenges for NAMSAP in planning and organizing its educational programs. This year's conference, co-chaired by NAMSAP President Gary Paturneau and Michelle Allan, should be congratulated for setting new standards for attendance (180) and sponsor/exhibitors (15) as well as the quality and organization of the speakers and extensive handout materials. The conference educational program was divided into two parts: an "MSP Crash Course" and the General Conference.

NAMSAP 2016 CONFERENCE

TOPICS AND SPEAKERS

MSP "CRASH COURSE"

• MEDICARE SECONDARY PAYER ACT 101 - Dan Anders and Leslie Schumacher
• GENERAL ANATOMY OF THE WCMSA REFERENCE GUIDE - Jake Reason and Kathleen Wyeth
• WHAT WOULD CMS DO? - Barbara Fairchild and Erin O'Neill

GENERAL CONFERENCE

• CONFERENCE INTRODUCTION - Gary Paturneau and Michelle Allan (Co-Chairs)
• MEDICARE ADVANTAGE ORGANIZATION CASE LAW - Ciara Koba; Heather Sanderson Hon Lee Yeakel; Jennifer Jordan
• CIVIL MONETARY PENALTIES - Katie Fox; Monika Boswein
• CURRENT STATE OF CONDITIONAL PAYMENT RECOVERY - Michele Carey; Shawn Deane; William Delaney
• PRIMARY PAYER APPEALS - Deborah Robinson Stewart; Melissa Woitalewicz; Kim Young
• ADVENTURES IN ALLOCATING - Christine Melancon; Beth Hostetler; Jake Reason
• SUBMISSION VS. NON-SUBMISSION (OPT-OUT) FOR WC - John Cattie; Jennifer Jordan; MeLinda Petit; Robert Sagrillo; Mark Sidney; Rita Wilson; Mark Walls (Moderator)
• LIABILITY MSAS - David Cherry; Roy Franco; Thomas Spratt
• SETTLEMENT LANGUAGE - Joy Brewer; James Raines; Vincent Quatrini
• CONFLICTS WITH STATE LAW - Jeanmarie Calcagno (IL), Rodney McColloch (GA), Joseph Schneider (TX)
• WCMSA RE-REVIEW PROCESS - Carmen Folluo; Shannon Metcalf; Kimberly Wiswell
• MITIGATING COSTS WHILE PROVIDING QUALITY CARE - Amy Bilton; Amy Lee; Mark Pew; Pamela Schweitzer.
• WHAT IS AFFECTING STAKEHOLDERS - John Cattie; Doug Holmes; Greg McKenna; Gary Paturneau

NOTEWORTHY NAMSAP PRESENTATIONS

Among NAMSAP's many outstanding conference presentations, S2KM found the following most noteworthy from a structured settlement perspective:

• The "Crash Course" presentation "Medicare Secondary Payer Act 101", which also featured an informative Medicare Overview and included exceptional handouts, did not reference structured settlements. With that single proviso, however, this NAMSAP presentation successfully captured, organized and communicated applicable information and data better than any prior presentation S2KM has attended - and should become part of the core curriculum for future educational programs offered by the National Structured Settlement Trade Association (NSSTA) and the Society of Settlement Planners (SSP).
• Another NAMSAP "Crash Course" presentation which arguably should have, but did not, discuss structured settlements, was titled: "General Anatomy of the WCMSA Reference Guide". Specific references to "structured settlements" exist throughout the WCMSA Reference Guide - see, for example: Table of Contents 5.0; 5.2; 19.3; Appendix 3 (Glossary entry for "structured settlement"); and Appendix 5:15. Paradoxically, and more importantly, the subtitle for this NAMSAP's Crash Course presentation (the "Final resting place for the old CMS memos"), is critically important for understanding why structured settlements provide an inherent cost advantage, compared with cash, in funding WCMSAs - as S2KM first explained in this 2013 blog post and which appears to remain just as applicable and important in the context of CMS WCMSA Reference Guide Version 2.5.
• Only one NAMSAP 2016 conference presentation ("Settlement Language") substantively addressed structured settlements issues. Significantly, based upon S2KM's review, the structured settlement documentation included with the NAMSAP conference handouts for this presentation raised potential tax issues and highlighted a fundamental problem. The CMS WCMSA Reference Guide Glossary defines "structured settlement" as "[a] settlement in which the agreed-on funds are paid from an initial deposit and subsequent deposits on a regular basis for a given amount of time." Unfortunately, there is no specific link in the CMS WCMSA Reference Guide to either structured settlement tax law generally or the tax definition for “structured settlement” in IRC 5891(c)(1) or the tax requirements of IRC 130 and 104(a)(1) more specifically. Settlement documentation which may satisfies CMS, therefore, does not automatically satisfy the IRS.
• The concluding NAMSAP panel discussing "What is Affecting Stakeholders" provided a valuable, if overly brief, summary of the complex Federal and state legislative and regulatory developments re-shaping personal injury claim management and settlement planning. Although many of the Medicare-related developments were addressed individually by separate NAMSAP presenters, the "Big Picture" perspective helped to reinforce how dramatically and quickly systemic changes are redefining the marketplace. For the structured settlement industry to expand and retain a leadership position within these dynamic claim management and settlement planning markets, it follows (at least from S2KM's perspective) that industry leaders must improve their collective knowledge of the changing landscape (much of it related to government benefits) in order to help industry participants learn to re-position their sale from a stand alone alternative product to a critical component of integrated claim and settlement solutions.

ADDITIONAL S2KM OBSERVATIONS

During the NAMSAP 2014 Regional Conference, then NAMSAP President Michael Westcott explained why structured settlements and MSAs produce "a perfect match that also saves stakeholders on the cost of compliance":

• "A structured settlement is a contract that defines specific future periodic payments for a specific dollar amount for a specified time."
• "An MSA is an agreement with CMS to pay agreed upon future costs for an agreed dollar amount for an agreed period of time."

"Good settlement planning", Westcott added, "requires that all professional advisers know the roadmap to compliance." Unfortunately, he concluded, structured settlements continue to be underutilized amid too much discussion on process and too little on benefits.

Just as Westcott pointed out in 2014, structured settlements continue to be underutilized in 2016 - especially considering the inherent cost advantage CMS has provided for structured settlement funding of WCMSAs compared with cash. Among the reasons (from S2KM perspective): a strategic knowledge gap separates most of the structured settlement industry from the MSP community creating, especially for structured settlements, educational needs but also business opportunities. Some examples and thoughts:

• Among a diverse, intelligent and influential group of NAMSAP speakers, 15 exhibitors and 180 attendees, only six structured settlement brokers attended this year's NAMSAP conference; none of whom were featured speakers; and only one broker company exhibited. No structured settlement annuity provider representatives attended or exhibited.
• NSSTA's current Certified Structured Settlement Consultant (CSSC) certification program does not cover MSAs, or the MSP Act or government benefits more generally. This educational omission probably results, at least in part, from NSSTA's historic political and marketing slogan that: "structured settlements enable injury victims to live free of reliance on government assistance".
• Regardless of its historic accuracy and/or value, this political/marketing slogan now appears not only false but contradictory and counterproductive. For many of the most promising and strategic structured settlement submarkets (including not just MSAs, but also special needs trusts, the Affordable Care Act, and the ABLE Act) the challenges and growth opportunities require integrating structured settlements with government benefits.
• In 2014 NSSTA commissioned separate surveys of senior claims executives, claims professionals and plaintiff attorneys. Significant for Medicare and MSAs, two thirds of the senior claims executive survey participants said they believed that structured settlement broker/consultant skills had stayed the same compared to 10 years ago and that they would value more educational and informational services about MSA requirements. They also recommended that structured settlement broker/consultants expand their Medicare services. Claims professionals, when asked their preferred areas for more education, gave their highest response by far (71%) to MSAs.
• Providing a "carrier perspective" on MSA compliance during their 2014 NAMSAP Regional Conference presentation, claims executives William Paxman and Todd Reimer pointed out that, although MSA issues are increasingly complex, they tend to align plaintiff attorneys and defendants - a decidedly positive characteristic for the structured settlement industry which has struggled historically with plaintiff vs. defendant broker "issues".

The structured settlement and Medicare Secondary Payer communities of professional practice increasingly overlap and share complementary knowledge and clients. A more formal working relationship that encompasses their respective professional associations and addresses shared educational, marketing, legislative, and regulatory considerations would likely improve and further expand both communities.

MSP ACT AND MSA BACKGROUND

MSAs are administrative and funding mechanisms utilized in certain categories of settlements to protect Medicare's interests as "secondary payer" under the MSP statute. Enacted in 1980, the MSP Act requires certain insurers, including liability, automobile, no-fault and workers compensation insurers, to make payment first for services to Medicare beneficiaries regarding claimed injuries, with Medicare responsible only as a “secondary payer.”

The Centers for Medicare & Medicaid Services (CMS), the Federal agency responsible for administering Medicare policies, failed to take practical steps to enforce the MSP rules until 2001 when it issued the first of several policy memoranda addressing workers compensation (WC) MSAs. These policy memoranda created a format, checklists and procedures for seeking approval for WCMSAs to "protect Medicare's interests" when workers compensation cases are settled.

Several of these WCMSA policy memoranda address, directly or indirectly, structured settlement issues. One of these policy memoranda (dated October 15, 2004) addresses WCMSA present value calculations and provides an important pricing advantage for annuity funding compared with lump sum funding.

During 2013, CMS published both an 88 page WCMSA Reference Guide - since updated to Version 2.5. The Reference Guide's intended purpose is to help WCMSA professionals, beneficiaries and other stakeholders "understand CMS' [WCMSA] amount approval process and to serve as a reference for those electing to submit such proposals to CMS for approval." CMS has also published a WCMSA Self-Administration Toolkit to help self-administrators manage their WCMSA accounts appropriately. Both the Reference Guide and the Toolkit prominently feature structured settlements.

Although CMS and its field offices have also issued informal guidance about the use of MSAs in liability cases, nothing comparable exists to the CMS WCMSA memoranda, WCMSA Reference Guide or the WCMSA Self-Administration Toolkit. As a result, there currently is no consensus among tort practitioners as to whether and when MSAs are required in liability cases. Lack of CMS guidance has not prevented an increase in the number of liability MSAs, according to leading professional MSA administrators. Unlike WCMSAs, however, liability MSAs typically are not submitted to CMS for approval.

S2KM Reporting for Prior NAMSAP Conferences

• 2005 NAMSAP Annual Meeting
• 2008 NAMSAP Annual Meeting
• 2010 NAMSAP Annual Meeting
• 2014 NAMSAP Regional Meeting
  • Part 1
  • Part 2
• 2014 NAMSAP Annual Meeting
• 2015 NAMSAP Winter Regional Conference
• 2015 NAMSAP Annual Conference

S2P2J Release 57 Highlights

The United States structured settlement market has been in existence for more than 35 years and continues to expand its scope, complexity and importance within the context of personal injury settlement planning.

Since it was first published in 1986, "Structured Settlements and Periodic Payment Judgments" (S2P2J), has provided structured settlement stakeholders with an authoritative reference guide, consisting of 16 chapters with extensive footnotes and Appendix documents, to help them understand issues and fashion settlements and judgments utilizing periodic payments. Both the National Structured Settlement Trade Association (NSSTA) and the Society of Settlement Planners (SSP) have utilized S2P2J as an educational resource for their certification programs.

Co-authored and updated semi-annually by Daniel W. Hindert, Joseph J. Dehner and Patrick J. Hindert, S2P2J now features an online version as well as the traditional hardcopy. Online S2P2J includes a search feature and download capability as well as link features to access individual book sections, appendices, footnotes, cases and statutes.

Publisher Law Journal Press anticipates a March 2015 distribution date for hardcopy supplements for S2P2J Release 57 with online S2P2J subcribers receiving their update simultaneously with no additional subscription charge. Competent professionals confronted by structured settlement issues should have access to an up-to-date copy (or the online version) of this indispensable source book.

Release 57 Highlights - Release 57 will feature new, updated and/or expanded sections addressing the following structured settlement topics:

• WCMSAs - Release 57 re-positions and expands S2P2J's extensive summary of the new CMS rules for workers compensation Medicare set-asides, the fastest growing segment of the structured settlement primary market. Regulatory rules for liability MSAs remain essentially unchanged following the withdrawl by CMS on August 8, 2014 of it the liability MSA-related NPRM it had earlier submitted to the Office of Management and Budget.
• Indexed Annuities - PLR 143928-13 highlights the potential importance of indexed annuities and annuity riders as structured settlement funding alternatives. Release 57 features a new section explaining indexed annuities, differentiating variable annuities and summarizing the related PLR.
• Commutation Riders - PLR 143928-13 also provided favorable tax treatment for a commutation rider pursuant to a Notice of Hardship Conversion as a potential alternative to factoring transactions. This PLR justified an expansion in Release 57 of S2P2J's current section discussing commutations.
• Non-qualified Assignments - Most non-qualified assignments depend upon off-shore assignment companies which raise tax and security issues for participants. Release 57 expands S2P2P's analysis of non-qualified assignments to address these issues.
• CLM Advisors Surveys - Release 57 summarizes results from two surveys commissioned by NSSTA to determine the value claims executives and adjustors place on structured settlements and structured settlement consultants. The results and related metrics are generally favorable and arguably provide a valuable marketing blueprint for defense brokers.
• ABLE Accounts - Release 57 features a new section describing ABLE Accounts, a tax-preferenced funding option authorized by the Achieving a Better Life Experience Act (ABLE Act) of 2014. Although some structured settlement consultants view ABLE Accounts as a competitive product, others see opportunities to fund ABLE accounts using structured settlements.
• Insurance Regulation - States historically have regulated insurance in the United States. As a result of the 2008 global financial crisis, however, new federal and international insurance regulatory agencies now exist which are targeting some of the largest structured settlement annuity providers among other financial and insurance companies. Release 57 adds a new section to introduce and explain these new regulatory developments and entities.
• ELNY and Reliance - The recent ELNY and Reliance liquidations have each impacted thousands of structured settlement recipients. Although judicial solutions have been fashioned, litigation continues - as least involving some ELNY shortfall payees. Release 57 updates S2P2J's extensive coverage of the ELNY and Reliance liquidations.
• Role of Plaintiff Attorneys - As structure settlements and personal injury settlement planning have become more complex, and plaintiff attorneys increasingly require the services of other settlement planning professionals, plaintiff attorneys should continue to perform certain essential structured settlement and settlement planning roles. Release 57 identifies and discusses those roles and provides additional related advice for plaintiff attorneys.
• Secondary Market Update - The continuing expansion of the secondary market has generated controversy and litigation as well as legislative reform and changing business practices. S2P2J continues to track these developments in expanding chapter 16 titled "Transfers of Structured Settlement Payment Rights". Release 57 highlights include "anti-assignment" issues in Illinois originating with the Brenston case and the market "chaos" some secondary market participant see occurring as the result of the Washington Square v. RSL Funding case.
• IRC 104(a)(2) Treasury Regulations - Recent U.S. Treasury Regulations for IRC 104(a)(2) relating to the exclusion from gross income for amounts received on account of personal physical injuries or physical sickness make two primary changes to the current regulations which Release 57 summarizes in the context of S2P2J more extensive analysis in Chapter 2 of "Taxation of Damages Received by the Claimant".

For related S2KM blog reporting about structured settlement 2014 developments, see:

• Primary market
• Secondary market
• Settlement planning
• ELNY and Reliance

 

NAMSAP 2015 Winter Regional Conference

Medicare compliance continues to create "confusion, misinformation and disagreement" among defendants, their insurers and advisors according to speakers at the 2015 Winter Regional Conference hosted by the National Alliance of Medicare Set-Aside Professionals (NAMSAP) January 29 in Orlando.

NAMSAP is "the only non-profit association exclusively addressing the issues and challenges of the Medicare Secondary Payer Statute and its impact on workers’ compensation and liability settlements".

NAMSAP's membership is the most professionally diverse of any U.S. settlement planning association and includes a mix of attorneys, Medicare Secondary Payer (MSP) consultants, CPAs, claims adjustors, structured settlement consultants, guardians, nurses, pharmacists, rehabilitation professionals, and life care planners.

The claims environment has changed dramatically and become much more complex, according to multiple NAMSAP speakers who focused their presentations on issues that arise when Medicare is involved in a case.

Medicare issues are complicated for defendants by adjustor turnover, the need for Medicare education and the comprehensive liability defendants face if Medicare is not protected. Medicare compliance, therefore, is not just about preparing a good Medicare set-aside (MSA). It is about complying with the Medicare Secondary Payer (MSP) statute.

The MSP statute, as amended by the SMART Act in 2013, has three compliance components (past reimbursement; present reporting; and future protecting) which one of the NAMSAP panels succinctly summarized. The greatest confusion for plaintiffs and defendants relates to protecting Medicare's interest in the future. One speaker compared the current situation to the "wild west" and several speakers emphasized "it is all about the data".

Focusing most of its compact program on MSP compliance, NAMSAP's Educational Committee successfully presented multiple complex topics and developments effectively utilizing a case study methodology to advise attendees on issues they can expect to confront in their own case files.

WCMSAs - Structured Settlements

For workers compensation (WC) cases, CMS (the responsible administrative agency) has published both a WCMSA Reference Guide and a WCMSA Self-Administration Toolkit - each of which features extensive rules for structured settlements.

WCMSAs have become an increasingly important submarket for structured settlements. S2KM has previously estimated that as much as eight (8%) percent of recent structured settlement premium and 24 percent of recent structured settlement annuities are attributable to WCMSAs.

In the WCMSA context, structured settlements have one primary advantage (lower cost), which (from a defense perspective) outweighs their one primary disadvantage (administrative complexity), compared with cash. The cost advantage results from one CMS policy memorandum (dated: October 15, 2004) which sets forth the CMS "set-off" approach for calculating present value.

The CMS "set-off" approach ignores inflation and discount rates. Annuities, however, incorporate their own discount rates and therefore produce an inherently lower comparable cost for funding future periodic payments. The CMS WCMSA Reference Guide specifically "follows all" of CMS' previously published memoranda and thereby (apparently) maintains the WCMSA pricing advantage for structured settlements.

Following NAMSAP's previous "Take the Hill" Washington D.C. lobbying success, NAMSAP's 2015 political agenda seeks federal legislation to address perceived CMS WCMSA deficiencies:

• Thresholds result in incomplete protection.
• No direct right of appeal exists.
• Review time-lines are uncertain.
• CMS rules ignore state workers compensation laws.
• CMS assumes all settlements are “commutations”.

NAMSAP anticipates two alternative MSP legislative proposals will be re-introduced in the U.S. House of Representatives (H.R. 1982) and Senate (S. 2731) in 2015

Liability MSAs - CMS-6047-ANPRM

Unlike WCMSAs, almost no regulatory authority exists for MSAs in third party liability settlements. In 2012, pursuant to the Administrative Procedures Act, CMS sent to the Office of Management and Budget (OMB) and published in the Federal Register seeking public comment an Advanced Notice of Proposed Rule Making (ANPRM) for liability MSAs.

In CMS-6047-ANPRM (titled: "Medicare Program; Medicare Secondary Payer and "Future Medicals"), CMS offered seven options for dealing with future medicals in liability cases. NAMSAP conference speaker Douglas Shaw reviewed the CMS options and summarized the 107 comments submitted by interested parties.

Virtually all of the comments, according to Shaw, opposed the ANPRM in whole of in part. The primary objections concerned CMS' concept of "equitable apportionment" and the CMS failure to recognize differences between liability and workers compensation cases.

CMS followed up its ANPRM by sending a Notice of Proposed Rule Making (NPRM) to OMB on August 1, 2013, then withdrew the NPRM without explanation on August 8, 2014. Shaw stated that OMB (which reviews NPRM for cost and benefits, duplications, economic impact, effect on stakeholders) rejected the CMS NPRM and no one knows why except OMB and OMB is prohibited from providing explanations.

Shaw cautioned against groups (such as the AAJ) claiming a regulatory victory. He expects CMS to resubmit another NPRM for liability MSAs in the near future. Multiple NAMSAP speakers pointed out the obvious - since the enactment of MMSEA in 2007, CMS has been collecting data for all claims involving Medicare beneficiaries. This Medicare-related claims data is creating a potential tax-free source of revenue for the U.S. government - billions of Medicare dollars not yet collected to fund Medicare.

As for current liability cases and liability MSAs, Shaw advised that "nothing has changed so we should stay the course and do whatever we thought best before this ANPRN/NPRM."

ICD-10

Adding to claim management and settlement planning complexity in 2015, the United States compliance date for the 10th revision of the International Statistical Classification of Diseases and Related Health Problems (ICD-10) is October 15, 2015.

Although most of the NAMSAP audience appeared ICD-10 conversant, Marci Moorehead provided an informative overview of this World Health Organization (WHO) medical classification coding system which many other countries have already implemented. Moorehead predicted the migration to ICD-10 will have a significant impact on business intelligence tools which means life care plans, MSAs and settlement plans likely will be affected.

NAMSAP's 2015 Annual Meeting will take place September 29-October 2 at the Royal Sonesta Hotel in New Orleans.

NAMSAP 2015 Winter Conference - Topics and Speakers

• 3 Parts of Compliance and the SMART Act in 2015
  • Moderator - Katie Fox
  • Monika Boswein
  • Brian Chance
  • Roy Franco
• ANPRM Update - Doug Shaw
• ICD-10 - Marci Moorehead
• Advocacy - Take the Hill and Other Issues
  • Katie Fox
  • Roy Franco
  • Doug Shaw
• Private Cause of Action and False Claims
  • Rasa Fumagalli
  • William Delaney
  • Mark Poplizio
• Working Lunch with Case Studies - Moderator - Thomas Spratt
• Protecting the Client
  • Daniel Hayes - Moderator
  • Ray Alverez
  • Anita Hunt
  • Tracey Jones

WCMSA Self-Administration Toolkit

Continuing a series of workers compensation (WC) Medicare set-aside (MSA) regulatory compliance initiatives, the Centers for Medicare and Medicaid Services (CMS) has published a WCMSA Self-Administration (SA) Toolkit.

CMS' stated purposes for this Toolkit are to help WCMSA self-administrators:

• Manage their WCMSA accounts appropriately.
• Satisfy Medicare’s interests related to future medical care.
• Ensure Medicare will pay future Medicare-covered costs related to their WC injuries when the WCMSA is depleted.

MSA Background

MSAs are administrative and funding mechanisms utilized in certain categories of settlements to protect Medicare's interests as "secondary payer" under the Medicare Secondary Payer (MSP) statute. Enacted in 1980, the MSP Act requires certain insurers, including liability, automobile, no-fault and workers compensation insurers, to make payment first for services to Medicare beneficiaries regarding claimed injuries, with Medicare responsible only as a “secondary payer.”

CMS, the agency responsible for administering Medicare policies, failed to take practical steps to enforce the MSP rules until 2001 when it issued the first of several policy memoranda addressing WCMSAs. These policy memoranda created a format, checklists and procedures for seeking approval for WCMSAs to "protect Medicare's interests" when workers compensation cases are settled.

Several of these WCMSA policy memoranda address, directly or indirectly, structured settlement issues. One of these policy memoranda (dated October 15, 2004) addresses WCMSA present value calculations and provides an important pricing advantage for annuity funding compared with lump sum funding.

During 2013, CMS published both an 88 page WCMSA Reference Guide (WCRG) and a 13 page supplement (WCRG Version 2.0). The WCRG's intended purpose is to help WCMSA professionals, beneficiaries and other stakeholders "understand CMS' [WCMSA] amount approval process and to serve as a reference for those electing to submit such proposals to CMS for approval."

S2KM has written two blog posts summarizing the initial WCRG:

• Part 1 - Non-structured settlement issues.
• Part 2 - Structured settlement issues.
• For highlights of the WCRG Version 2.0, see this blog post written by Douglas Shaw.

Significantly for structured settlements, WCRG Appendix 4 defines "present-day value" as "the cost to fund a WCMSA annuity" and further states: "[t]he WCRG follows all CMS policy memorandums currently in effect."

Neither WCRG Version 2.0 or the WCMSA SA Toolkit address "present value". Therefore, it appears the October 15, 2004 CMS WCMSA policy memorandum remains in effect and annuities continue to offer lower-cost funding alternatives compared with lump sums for many, if not most, WCMSAs.

Although CMS and its field offices have also issued informal guidance about the use of MSAs in liability cases, nothing comparable exists to the CMS WCMSA memoranda, WCRG or WCMSA SA Toolkit. As a result, there currently is no consensus among tort practitioners as to whether and when MSAs are required in liability cases. Anticipating publication of MSA rules for liability cases, however, CMS has published HHS/CMS RIN: 0938-AR43.

Structured Settlements - Comparing the WCMSA SA Toolkit and the WCRG

Although both the MSAWC SA Toolkit (Toolkit) and the WCRG both address structured settlements in multiple sections, the administration (post-settlement) focus (including structured settlements) of the Toolkit is narrower than the WCRG and its treatment of structured settlement issues is generally less comprehensive.

The following Toolkit sections address structured settlement issues. S2KM has added references to related WCRG sections where applicable.

• Section 3: How Your WCMSA is Funded - compare WCRG Section 5.0.
• Section 8: Annual Attestation
• Section 11: Topics Unique to Structured Accounts - compare WCRG Section 19.3.
• Section 13: Letters and Examples - which includes three sample structured account attestation and expenditure letters which do not appear in the WCRG:
  • Annual attestation.
  • Temporary exhaustion.
  • Permanent exhaustion.
• Section 14: Glossary - The Glossaries of the both Toolkit and the WCRG include definitions for "structured settlement". Although consistent, the two definitions are worded slightly differently. Neither definition mentions annuities or references the tax definition for "structured settlement" in IRC 5891(c)(1).

The Toolkit does not address structured settlement issues which appear in the following WCRG sections:

• Section 10.1.1
  • WCMSA cover letter
  • Settlement amount
• Section 10.1.3 - Rated Age Information or Life Expectancy
• Appendix 5:15 - Rated Age Information or Life Expectancy
  • Rated Age Statement
  • Annuity Provider Underwriting Assessment
  • Annuity Broker Statement
• Appendix 5:25 - Settlement Agreement or Proposed or Court Order

Related S2KM reporting

• Medicare Compliance Legislation
• The Medicare, Medicaid and SHIP Extension Act (MMSEA)
• NAMSAP 2014 Regional Conference
• Part 1 - Speakers and Topics
• Part 2 - WCMSA Market Metrics