What a set-aside is
Medicare is a secondary payer for work injuries: workers' compensation is supposed to pay first. A set-aside is a portion of a settlement reserved for future medical expenses related to the injury that Medicare would otherwise cover. Once the set-aside money is properly spent on that care, Medicare pays as usual.
When CMS reviews a proposed set-aside
Under section 8.1 of the CMS WCMSA Reference Guide (version 4.7, October 5, 2026), CMS reviews a proposed set-aside in two situations:
| Claimant | Total settlement |
|---|---|
| Already a Medicare beneficiary | More than $25,000 |
| Reasonably expected to enroll in Medicare within 30 months of the settlement date | More than $250,000 (future medical plus disability or lost wages over the life of the settlement) |
CMS says these thresholds reflect its workload and do not mean a claimant can settle below them "with impunity." CMS applies the threshold in effect at the time of settlement.
What counts as a reasonable expectation of Medicare
The reference guide lists situations such as having applied for Social Security disability, having been denied but planning to appeal, being in the process of appealing or re-filing, or being age 62 years and 6 months or older. Someone receiving Social Security disability will usually become eligible for Medicare after a waiting period, which is why SSDI and set-asides often go together. See workers' comp and SSDI.
Frequently asked questions
Is a Medicare set-aside required?
CMS's reference guide says there are no statutory or regulatory provisions requiring you to submit a set-aside proposal to CMS for review. Medicare's interests still have to be considered when a settlement closes future medical care, which is why set-asides are common.
What is the $25,000 rule for a Medicare set-aside?
CMS reviews a proposed set-aside when the claimant is already a Medicare beneficiary and the total settlement is more than $25,000.
What is the $250,000 threshold?
CMS also reviews when the claimant has a reasonable expectation of Medicare enrollment within 30 months of settlement and the total settlement is expected to exceed $250,000.
Sources
Checked November 3, 2026.