I 
113TH CONGRESS 
1ST SESSION H. R. 1982 
To amend section 1862 of the Social Security Act with respect to the applica-
tion of Medicare secondary payer rules to workers’ compensation settle-
ment agreements and Medicare set-asides under such agreements. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 15, 2013 
Mr. REICHERT (for himself and Mr. THOMPSON of California) introduced the 
following bill; which was referred to the Committee on Ways and Means, 
and in addition to the Committee on Energy and Commerce, for a period 
to be subsequently determined by the Speaker, in each case for consider-
ation of such provisions as fall within the jurisdiction of the committee 
concerned 
A BILL 
To amend section 1862 of the Social Security Act with 
respect to the application of Medicare secondary payer 
rules to workers’ compensation settlement agreements 
and Medicare set-asides under such agreements. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Medicare Secondary 
Payer and Workers’ Compensation Settlement Agree-
ments Act of 2013’’. 
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SEC. 2. APPLICATION OF MEDICARE SECONDARY PAYER 
RULES TO CERTAIN WORKERS’ COMPENSA-
TION 
SETTLEMENT 
AGREEMENTS 
AND 
QUALIFIED 
MEDICARE 
SET-ASIDE 
PROVI-
SIONS. 
(a) THRESHOLD
FOR SECONDARY PAYER PROVI-
SIONS FOR CERTAIN WORKERS’ COMPENSATION SETTLE-
MENT AGREEMENTS.—Section 1862 of the Social Security 
Act (42 U.S.C. 1395y) is amended— 
(1) in subsection (b)(2)(A)(ii), by inserting 
‘‘subject to subsection (p),’’ after ‘‘(ii)’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(p) THRESHOLD FOR SECONDARY PAYER PROVI-
SIONS FOR CERTAIN WORKERS’ COMPENSATION SETTLE-
MENT AGREEMENTS.— 
‘‘(1) IN GENERAL.—A workers’ compensation 
law or plan shall not be treated as a primary plan 
for purposes of subsection (b) with respect to a 
workers’ compensation settlement agreement if the 
agreement (or claimant under the agreement) meets 
any of the following requirements: 
‘‘(A) TOTAL
SETTLEMENT
AMOUNT
NOT 
EXCEEDING
$25,000.—Such agreement has a 
total settlement amount (as determined under 
paragraph (2)) that does not exceed $25,000 or 
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such greater amount as the Secretary may 
specify in regulations. 
‘‘(B) LIKELY INELIGIBILITY OF WORKERS’ 
COMPENSATION CLAIMANT FOR MEDICARE BEN-
EFITS.—The claimant subject to such agree-
ment— 
‘‘(i) is not eligible for benefits under 
this title as of the effective date of the 
agreement; and 
‘‘(ii) is unlikely to become so eligible, 
as determined under paragraph (3), within 
30 months after such effective date. 
‘‘(C) NO
FUTURE
WORKERS’ COMPENSA-
TION MEDICAL EXPENSES.—The claimant sub-
ject to such agreement is not eligible for pay-
ment of medical expenses incurred after the ef-
fective date of the agreement from the workers’ 
compensation law or plan of the jurisdiction in 
which such agreement will be effective. 
‘‘(D) NO LIMITATION ON FUTURE WORK-
ERS’ COMPENSATION
MEDICAL
EXPENSES.— 
Such agreement does not limit or extinguish the 
right of the claimant to payment of medical ex-
penses incurred after the effective date of such 
agreement by the workers’ compensation law or 
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plan of the jurisdiction in which the agreement 
will be effective. 
‘‘(2) DETERMINATION OF TOTAL SETTLEMENT 
AMOUNT
OF
WORKERS’ COMPENSATION
SETTLE-
MENT
AGREEMENT.—For purposes of paragraph 
(1)(A) and subsection (q) and with respect to a 
work-related injury or illness that is the subject of 
a workers’ compensation settlement agreement, the 
total settlement amount of the agreement is the sum 
of monetary wage replacement benefits, attorney 
fees, all future medical expenses, repayment of Medi-
care conditional payments, payout totals for annu-
ities to fund the expenses listed above, and any pre-
viously settled portion of the workers’ compensation 
claim. 
‘‘(3) DETERMINATION
OF
LIKELY
INELIGI-
BILITY OF CLAIMANT FOR MEDICARE BENEFITS.— 
For purposes of paragraph (1)(B)(ii), a workers’ 
compensation claimant shall be deemed unlikely to 
become eligible for benefits under this title within 30 
months after the effective date of the agreement un-
less, as of the effective date of the agreement, such 
claimant is insured for disability insurance benefits 
under section 223(c)(1) and is described in any of 
the following subparagraphs: 
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‘‘(A) AWARDED
DISABILITY
BENEFITS.— 
The individual has been awarded such disability 
insurance benefits. 
‘‘(B) APPLIED FOR DISABILITY.—The indi-
vidual has applied for such disability insurance 
benefits. 
‘‘(C) ANTICIPATES
APPEAL.—The indi-
vidual has been denied such disability insurance 
benefits but anticipates appealing that decision. 
‘‘(D) APPEALING OR REFILING.—The indi-
vidual is in the process of appealing or refiling 
for such disability insurance benefits. 
‘‘(E) MINIMUM AGE.—The individual is at 
least 62 years and 6 months of age. 
‘‘(F) END-STAGE
RENAL
DISEASE.—The 
individual is medically determined to have end- 
stage renal disease but does not yet qualify for 
health benefits under section 226A based on 
such disease. 
‘‘(4) DEFINITIONS.—For purposes of this sub-
section and subsection (q): 
‘‘(A) 
COMPROMISE
AGREEMENT.—The 
term ‘compromise agreement’ means a workers’ 
compensation settlement agreement that— 
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‘‘(C) WORKERS’ COMPENSATION
CLAIM-
ANT.—The term ‘workers’ compensation claim-
ant’ means a worker who— 
‘‘(i) is or may be covered under a 
workers’ compensation law or plan; and 
‘‘(ii) submits a claim or accepts bene-
fits under such law or plan for a work-re-
lated injury or illness. 
‘‘(D) WORKERS’ COMPENSATION LAW OR 
PLAN.— 
‘‘(i) IN GENERAL.—The term ‘work-
ers’ compensation law or plan’ means a 
law or program administered by a State or 
the United States to provide compensation 
to workers for a work-related injury or ill-
ness (or for disability or death caused by 
such an injury or illness), including the 
Longshore and Harbor Workers’ Com-
pensation Act (33 U.S.C. 901–944, 948– 
950), chapter 81 of title 5, United States 
Code (known as the Federal Employees 
Compensation Act), the Black Lung Bene-
fits Act (30 U.S.C. 931 et seq.), and part 
C of title 4 of the Federal Coal Mine and 
Safety Act (30 U.S.C. 901 et seq.), but not 
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including the Act of April 22, 1908 (45 
U.S.C. 51 et seq.) (popularly referred to as 
the Federal Employer’s Liability Act). 
‘‘(ii) INCLUSION
OF
SIMILAR
COM-
PENSATION PLAN.—Such term includes a 
similar compensation plan established by 
an employer that is funded by such em-
ployer or the insurance carrier of such em-
ployer to provide compensation to a worker 
of such employer for a work-related injury 
or illness. 
‘‘(E) WORKERS’ COMPENSATION PAYER.— 
The term ‘workers’ compensation payer’ means, 
with respect to a workers’ compensation law or 
plan, a workers’ compensation insurer, self-in-
surer, employer, individual, or any other entity 
that is or may be liable for the payment of ben-
efits to a workers’ compensation claimant pur-
suant to the workers’ compensation law or plan. 
‘‘(F) WORKERS’ COMPENSATION SETTLE-
MENT AGREEMENT.—The term ‘workers’ com-
pensation settlement agreement’ means an 
agreement, which includes a commutation 
agreement or compromise agreement, or any 
combination of both, between a claimant and 
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one or more workers’ compensation payers 
which— 
‘‘(i) forecloses the possibility of future 
payment of some or all workers’ compensa-
tion benefits involved; and 
‘‘(ii)(I) compensates the claimant for 
a work-related injury or illness as provided 
for by a workers’ compensation law or 
plan; or 
‘‘(II) eliminates cause for litigation in-
volving issues in dispute between the 
claimant and payer.’’. 
(b) SATISFACTION OF SECONDARY PAYER REQUIRE-
MENTS THROUGH USE OF QUALIFIED MEDICARE SET- 
ASIDES UNDER WORKERS’ COMPENSATION SETTLEMENT 
AGREEMENTS.—Section 1862 of the Social Security Act 
(42 U.S.C. 1395y), as amended by subsection (a), is fur-
ther amended by adding at the end the following new sub-
section: 
‘‘(q) TREATMENT OF QUALIFIED MEDICARE SET- 
ASIDES UNDER WORKERS’ COMPENSATION SETTLEMENT 
AGREEMENTS.— 
‘‘(1) SATISFACTION OF SECONDARY PAYER RE-
QUIREMENTS THROUGH USE OF QUALIFIED MEDI-
CARE SET-ASIDES.— 
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‘‘(A) FULL SATISFACTION OF CLAIM OBLI-
GATIONS.— 
‘‘(i) IN GENERAL.—If a workers’ com-
pensation settlement agreement, related to 
a claim of a workers’ compensation claim-
ant, includes a qualified Medicare set-aside 
(as defined in paragraph (2)), such set- 
aside shall satisfy any obligation with re-
spect to the present or future payment re-
imbursement under subsection (b)(2) with 
respect to such claim. The Secretary shall 
have no further recourse, directly or indi-
rectly, under this title with respect to such 
agreement. 
‘‘(ii) 
RULE
OF
CONSTRUCTION.— 
Nothing in this section shall be construed 
as requiring the submission of a Medicare 
set-aside to the Secretary. 
‘‘(B) MEDICARE
SET-ASIDE
AND
MEDI-
CARE SET-ASIDE AMOUNT DEFINED.—For pur-
poses of this subsection: 
‘‘(i) 
MEDICARE
SET-ASIDE.—The 
term ‘Medicare set-aside’ means, with re-
spect to a workers’ compensation settle-
ment agreement, a provision in the agree-
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ment that provides for a payment of a 
lump sum, annuity, a combination of a 
lump sum and an annuity, or other 
amount that is in full satisfaction of the 
obligation described in subparagraph (A) 
for items and services that the workers’ 
compensation claimant under the agree-
ment received or is likely to receive under 
the applicable workers’ compensation law 
and for which payment would be made 
under 
this 
title, 
but 
for 
subsection 
(b)(2)(A). 
‘‘(ii) 
MEDICARE
SET-ASIDE 
AMOUNT.—The term ‘Medicare set-aside 
amount’ means, with respect to a Medicare 
set-aside, the actual dollar amount pro-
vided for in clause (i). 
‘‘(2) QUALIFIED MEDICARE SET-ASIDE.— 
‘‘(A) REQUIREMENTS OF QUALIFIED MEDI-
CARE
SET-ASIDE.—For purposes of this sub-
section, the term ‘qualified Medicare set-aside’ 
is a Medicare set-aside in which the Medicare 
set-aside amount reasonably takes into account 
the full payment obligation described in para-
graph (1)(A), while meeting the requirements of 
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subparagraphs (B) and (C) and giving due con-
sideration to the following: 
‘‘(i) The illness or injury giving rise to 
the workers’ compensation claim involved. 
‘‘(ii) The age and life expectancy of 
the claimant involved. 
‘‘(iii) The reasonableness of and ne-
cessity for future medical expenses for 
treatment of the illness or injury involved. 
‘‘(iv) The duration of and limitation 
on benefits payable under the workers’ 
compensation law or plan involved. 
‘‘(v) The regulations and case law rel-
evant to the State workers’ compensation 
law or plan involved. 
‘‘(B) ITEMS AND SERVICES INCLUDED.—A 
qualified Medicare set-aside— 
‘‘(i) shall include payment for items 
and services that are covered and otherwise 
payable under this title as of the effective 
date of the workers’ compensation settle-
ment agreement and that are covered by 
the workers’ compensation law or plan; 
and 
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‘‘(ii) is not required to provide for 
payment for items and services that are 
not described in clause (i). 
‘‘(C) PAYMENT REQUIREMENTS.— 
‘‘(i) REQUIRED
USE
OF
WORKERS’ 
COMPENSATION FEE SCHEDULE.— 
‘‘(I) IN GENERAL.—Except in the 
case of an optional direct payment of 
a Medicare set-aside made under 
paragraph 
(5)(A), 
the 
set-aside 
amount shall be based upon the pay-
ment amount for items and services 
under the workers’ compensation fee 
schedule (effective as of the date of 
the agreement) applicable to the work-
ers’ compensation law or plan in-
volved. 
‘‘(II) WORKERS’ COMPENSATION 
FEE SCHEDULE DEFINED.—For pur-
poses of this subsection, the term 
‘workers’ compensation fee schedule’ 
means, with respect to a workers’ 
compensation law or plan of a State 
or a similar plan applicable in a State, 
the schedule of payment amounts the 
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State has established to pay providers 
for items and services furnished to 
workers who incur a work-related in-
jury or illness as defined under such 
law or plan (or in the absence of such 
a schedule, the applicable medical re-
imbursement rate under such law or 
plan). 
‘‘(ii) OPTIONAL
PROPORTIONAL
AD-
JUSTMENT FOR COMPROMISE SETTLEMENT 
AGREEMENTS.— 
‘‘(I) IN GENERAL.—In the case 
of a compromise settlement agree-
ment, a claimant or workers’ com-
pensation payer who is party to the 
agreement may elect to calculate the 
Medicare set-aside amount of the 
agreement by applying a percentage 
reduction to the Medicare set-aside 
amount 
for 
the 
total 
settlement 
amount that could have been payable 
under the applicable workers’ com-
pensation law or similar plan involved 
had the denied or contested portion of 
the claim not been subject to a com-
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promise agreement. The percentage 
reduction shall be equal to the denied 
or contested percentage of such total 
settlement. Such election may be 
made by a party to the agreement 
only with the written consent of the 
other party to the agreement. 
‘‘(II) 
APPLICATION.—If 
the 
claimant or workers’ compensation 
payer elects to calculate the Medicare 
set-aside amount under this clause, 
the 
Medicare 
set-aside 
shall 
be 
deemed a qualified Medicare set-aside. 
‘‘(D) 
CERTAIN
MEDICARE
SET-ASIDES 
WITH SAFE HARBOR AMOUNT DEEMED QUALI-
FIED MEDICARE SET-ASIDES.— 
‘‘(i) IN
GENERAL.—For purposes of 
this section and subject to clause (iv), a 
Medicare set-aside of a workers’ compensa-
tion settlement agreement shall be deemed 
a qualified Medicare set-aside if the Medi-
care set-aside amount involved is the safe 
harbor amount for the agreement and the 
agreement does not exceed $250,000. 
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‘‘(ii) WRITTEN
CONSENT.—A safe 
harbor amount, with respect to a workers’ 
compensation agreement, shall be treated 
as the Medicare set-aside amount for such 
agreement for purposes of clause (i) only 
upon written consent of all parties to the 
agreement. 
‘‘(iii) SAFE
HARBOR
AMOUNT
DE-
FINED.—For purposes of this subsection, 
the term ‘safe harbor amount’ means, with 
respect to a workers’ compensation settle-
ment agreement, 15 percent of the total 
settlement amount of the agreement (as 
determined under subsection (p)(2)), ex-
cluding repayment of conditional payments 
and previously settled portions of the claim 
involved. In applying the previous sentence 
for purposes of determining the safe har-
bor amount, with respect to a workers’ 
compensation agreement, if the agreement 
includes an annuity, the cost (but not the 
payout of the annuity) shall be included in 
determining the total settlement amount of 
the agreement. 
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‘‘(iv) MANDATORY
DIRECT
PAYMENT 
OF SAFE HARBOR AMOUNT.—A Medicare 
set-aside of a worker’s compensation settle-
ment agreement described in this para-
graph may not be treated as a qualified 
set-aside under clause (i) unless an election 
is made under paragraph (5)(A) to trans-
fer to the Secretary a direct payment of 
such set-aside. 
‘‘(E) SECRETARIAL AUTHORITY WITH RE-
SPECT TO DEEMED QUALIFIED MEDICARE SET- 
ASIDES WITH SAFE HARBOR AMOUNT.— 
‘‘(i) DETERMINATION.—If the Sec-
retary determines, based on the data de-
scribed in clause (ii), that the provisions of 
subparagraph (D) have caused a signifi-
cant negative financial impact (as specified 
by the Chief Actuary of the Centers for 
Medicare & Medicaid Services) on the Fed-
eral Hospital Insurance Trust Fund under 
section 1817 or the Federal Supplementary 
Medical Insurance Trust Fund under sec-
tion 1841, then the Secretary shall adopt 
rules to reduce such impact by modifying 
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the amount of the percent described in 
subparagraph (D)(iii). 
‘‘(ii) REQUIRED
DATA.—The deter-
mination under clause (i) shall be based on 
data on— 
‘‘(I) the projected effect of the 
provisions described in such para-
graph on the Federal Hospital Insur-
ance Trust Fund under section 1817 
or the Federal Supplementary Medical 
Insurance Trust Fund under section 
1841 during the three-year period be-
ginning on the date of the enactment 
of this subsection; as compared to 
‘‘(II) data on the effect on such 
trust funds of the provisions of sub-
section (b), as in effect during the 
three-year period prior to such date of 
enactment. 
‘‘(3) PROCESS FOR APPROVAL OF QUALIFIED 
MEDICARE SET-ASIDES.— 
‘‘(A) OPTIONAL PRIOR APPROVAL BY SEC-
RETARY.—A party to a workers’ compensation 
settlement agreement that includes a Medicare 
set-aside may submit to the Secretary the Medi-
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