by John Darer CLU ChFC CSSC RSP
The Center For Medicare and Medicaid Services (CMS) sure knows how to drop the Bomb, The Medicare Set aside (MSA) Rated Age Bomb
From the latest of 13 CMS Memoranda... there is a new requirement for MSA submissions involving rated ages:
“Our organization certifies that all rated ages obtained on the claimant, at any time during that individual claimant’s lifetime, have been included as part of this submission to the Centers for Medicare & Medicaid Services.” (underline added for emphasis)
As a bit of background, in its April 2005 ,CMS stated in Note 2 page 3 that where multiple rated ages are available, CMS would require the use of a median of the rated ages. This was apparently designed to force practioners to discontinue the practice of using the highest rated age to ensure the shortest available life expectancy and thus the lowest MSA funding amount (ultimately a "double discount")
CMS’ latest memorandum states that no variations or substitutions in wording will be acceptable. If the exact language is not used, they will price out your WCMSA based upon chronological age.
It is important to distinguish the use of rated age to "price out the WCMSA" in the CMS memo and the actual cost of the annuity if a structured MSA is used. The funder of the MSA will still be able to use the highest rated when it buys/funds the commercially available annuity for the structured MSA, it just wont get the "Double D".
But consider the burden of certifying this when the claimant may have received a rated age on an unrelated workers comp claim or a liability claim or lawsuit 10, 20, 30 years ago! Would it be best practice to rely on a statement from the claimant for accuracy?
Some say that CMS is looking to ban rated ages. Other speculation is that perhaps Patrick Hindert is far more powerful than anyone thought? In an April 24, 2010 effort to grow the structured settlement industry he posted about structured settlement public policy:
- "Why should structured settlement annuities cost less than lump sum alternatives to fund Medicare Set Aside Arrangements(MSAs)?"
and now just 2 weeks later, Voila!
More info about rated ages
Copy of CMS Memorandum 13 dated May 14, 2010 Download 13 May-14-2010 Memo