When more than one benefit program becomes involved in a workplace injury, figuring out who should pay the medical bills can be confusing. Medicare or Medicaid may have paid for treatment while a workers’ compensation claim was disputed, or an injured worker may be considering a settlement that closes future medical benefits.

For New York workers, Medicare, Medicaid, and workers’ compensation operate under different rules. Understanding how those rules interact can help prevent unexpected reimbursement demands or problems obtaining future care.

Keep reading to learn how Medicare and Medicaid can affect a New York workers’ compensation claim, particularly when medical benefits or a settlement are involved.

Key Takeaways About How Medicare and Medicaid Affect New York Workers’ Compensation Claims

• Workers’ compensation is generally responsible for medical care related to a compensable workplace injury.
• Medicare may make conditional payments when workers’ compensation does not pay promptly, but Medicare can seek repayment if the claim later results in a settlement, judgment, award, or other payment.
• Medicaid generally acts as the payer of last resort when another source, such as workers’ compensation, is responsible for medical expenses.
• A settlement that closes medical benefits can make the injured worker responsible for future treatment covered by the agreement.
• Medicare’s interests may need to be addressed even when a settlement does not qualify for formal CMS review of a Medicare Set-Aside proposal.

How Can Medicare or Medicaid Affect a Workers’ Compensation Claim in New York?

Medicare and Medicaid do not replace workers’ compensation coverage for a compensable work injury.

New York Workers’ Compensation Law § 13 generally requires an employer to provide necessary medical, hospital, surgical, and related treatment for a compensable injury for as long as the injury or recovery process requires. In practice, the employer’s workers’ compensation insurer or claim administrator generally pays for this care.

Medicare follows the federal Medicare Secondary Payer rules. When treatment is connected to a work-related injury, workers’ compensation is generally responsible for paying before Medicare. Providers treating a Medicare beneficiary for a work injury ordinarily must bill workers’ compensation first.

Medicaid also considers whether another person, insurer, or program has a legal obligation to pay. Because Medicaid generally serves as the payer of last resort, workers’ compensation coverage should be used first for covered treatment related to an open work-injury claim.

Having Medicare or Medicaid therefore does not automatically remove a medical bill from the workers’ compensation system. The reason for the treatment, the status of the claim, and the program that paid the bill all matter.

How Are Medical Bills Coordinated With Workers’ Compensation?

Payment issues can arise before anyone begins discussing a settlement.

Suppose an employee injures a knee at work, but the workers’ compensation carrier disputes whether the injury is covered. The employee still needs an MRI and medical treatment, so another health program pays some of the bills. If the workers’ compensation claim is later established, the parties may need to determine which bills relate to the work injury and whether another payer is entitled to reimbursement.

New York Workers’ Compensation Law § 13(d) addresses certain private insurers and health-benefit plans that pay medical or hospital expenses before a claim is found compensable. Subject to the statute’s limits and procedures, those plans may be entitled to reimbursement from the workers’ compensation carrier or employer. Medicare and Medicaid follow separate coordination and recovery rules.

For Medicaid pharmacy benefits, the New York Department of Health has issued specific NYRx guidance. When a Medicaid recipient has an open workers’ compensation case, workers’ compensation coverage must be used before NYRx is billed for prescriptions related to that injury. NYRx may still be billed for medications treating unrelated conditions.

Keeping medical bills, benefit statements, and payment notices organized can make it easier to determine which program paid each expense.

What Are Medicare Conditional Payments?

Medicare may make a conditional payment when workers’ compensation is responsible for treatment but has not paid promptly. For this purpose, federal rules generally treat “promptly” as payment within 120 days after the workers’ compensation entity receives a proper claim for the specific item or service.

The payment is conditional because Medicare expects reimbursement if the workers’ compensation matter later results in a settlement, judgment, award, or other payment establishing responsibility for the related care.

An injured worker or the worker’s representative may need to obtain Medicare’s conditional-payment information, review which charges are related to the work injury, dispute unrelated charges when appropriate, and resolve the final repayment amount.

For 2026, CMS generally will not seek conditional-payment recovery from, or require reporting of, a qualifying workers’ compensation settlement of $750 or less when the workers’ compensation entity does not otherwise retain ongoing responsibility for medical expenses. This limited recovery threshold is not a blanket exemption from Medicare’s rules.

Unresolved conditional payments can affect how much of a settlement ultimately remains available to the injured worker. The gross settlement amount may not reflect Medicare repayment obligations or other deductions that must be addressed.

Helpful records may include:

• Medicare or Medicaid notices
• Medical bills
• Explanation of benefits statements
• Workers’ compensation payment records
• Settlement correspondence
• Medical records identifying treatment related to the work injury

The goal is to determine which bills were paid, who paid them, and whether a payment-coordination or reimbursement issue remains.

How Can Medicare Affect a New York Workers’ Compensation Settlement?

A Section 32 Waiver Agreement can settle lost-wage benefits, medical benefits, or both. Once the agreement becomes final, the benefits covered by it are permanently closed unless all interested parties later agree to a modification and the Workers’ Compensation Board approves it.

If medical benefits remain open, the workers’ compensation carrier may continue paying for eligible treatment related to the established injury.

If medical benefits are settled, the carrier will no longer pay for future treatment covered by the agreement. The injured worker must use the settlement’s medical allocation or another available source of coverage.

New York Workers’ Compensation Board Section 32 guidance requires an agreement resolving medical benefits to identify the portion of the settlement allocated to future medical expenses. The Board may scrutinize or reject an agreement when the medical allocation is absent or insufficient despite an expected need for future treatment.

A general future-medical allocation is not necessarily a Medicare Set-Aside. A Workers’ Compensation Medicare Set-Aside Arrangement, or WCMSA, specifically allocates settlement funds for future work-injury treatment that Medicare would otherwise cover.

When a claimant receives a settlement that includes money for future medical care, Medicare’s interests must be considered. Failing to do so can result in Medicare denying payment for injury-related treatment until the appropriate settlement funds—or potentially the entire settlement—have been exhausted.

When Will CMS Review a Medicare Set-Aside Proposal?

Federal law does not require every WCMSA proposal to be submitted to CMS for approval. CMS nevertheless offers a voluntary review process that can provide greater certainty about the amount that must be reserved and properly spent before Medicare begins paying for related care.

CMS currently reviews a proposed WCMSA when:

• The claimant is already a Medicare beneficiary and the total workers’ compensation settlement exceeds $25,000; or
• The claimant has a reasonable expectation of Medicare enrollment within 30 months and the anticipated total settlement exceeds $250,000.

A person may have a reasonable expectation of Medicare enrollment within 30 months if, for example, the person has applied for Social Security Disability benefits, is appealing a denial of those benefits, is at least 62 years and six months old, or has end-stage renal disease but does not yet qualify for Medicare on that basis.

These amounts are CMS workload-review thresholds. They are not safe harbors, and they do not mean Medicare’s interests can be ignored in smaller settlements. CMS’s current WCMSA Reference Guide expressly states that claimants must still consider Medicare’s interests even when a settlement does not qualify for review.

CMS also stopped accepting and reviewing proposed WCMSAs with a zero-dollar allocation effective July 17, 2025. The parties may still conclude that no set-aside is necessary in circumstances recognized by CMS, but they should retain documentation supporting that conclusion.

What Should an Injured Worker Review Before Settling?

A workers’ compensation settlement offer may look straightforward, but the medical portion can have long-term consequences.

Before signing a Section 32 agreement, review:

• Which benefits are closing: Determine whether the agreement settles lost-wage benefits, medical benefits, or both.
• Expected future treatment: Consider follow-up appointments, prescriptions, therapy, injections, medical equipment, and possible surgery.
• The medical allocation: Review how much of the settlement is identified for future medical expenses.
• Past Medicare payments: Determine whether Medicare paid for treatment related to the work injury and whether conditional payments remain unresolved.
• Medicaid payments: Identify any Medicaid-paid services related to the injury so that applicable coordination or reimbursement questions can be addressed.
• Medicare eligibility: Consider whether you already receive Medicare or reasonably expect to enroll soon.
• A possible Medicare Set-Aside: Determine whether Medicare’s future interests require a WCMSA and whether the proposal qualifies for CMS review.
• Administration requirements: If a WCMSA is established, understand how its funds may be used and what records or annual attestations must be maintained.

The Workers’ Compensation Board requires claimants to watch its “Settling Your Claim” video before entering into a Section 32 agreement. The Board also advises injured workers to discuss their expected future medical needs and treatment costs with their medical providers before settling.

One additional provision deserves attention: hold-harmless language. The Board will not approve a Section 32 agreement requiring the claimant to indemnify or hold the insurer harmless. This prohibition includes provisions attempting to shift Medicare-related liability or responsibility for problems administering a Medicare Set-Aside onto the injured worker.

Can Medicaid Affect a Section 32 Settlement?

Receiving Medicaid does not automatically prevent an injured worker from entering into a Section 32 agreement. However, Medicaid payments related to the work injury should be identified before the settlement is finalized.

Medicaid’s rules differ from Medicare’s. There is no CMS-style Medicaid set-aside review process equivalent to the WCMSA process. Medicaid eligibility and third-party payment issues can also depend on the recipient’s particular coverage category and circumstances.

For that reason, an injured worker who receives Medicaid should not assume that Medicaid will automatically pay for all future work-injury treatment after workers’ compensation medical benefits are closed. The settlement’s effect on payment responsibility and continued program eligibility should be reviewed before signing.

Can Policy Updates Change an Existing Workers’ Compensation Award?

A Medicare or Medicaid administrative update does not automatically change a New York workers’ compensation award or determine whether a workplace injury is compensable.

An update may instead affect matters such as:

• Which payer a medical provider must bill first
• How a prescription claim should be submitted
• How Medicare conditional payments are reported and resolved
• Whether CMS will review a proposed WCMSA
• What documents must be submitted during the review process
• How set-aside funds must be administered and documented

The terms of an existing workers’ compensation award generally continue to govern unless the Board issues a new decision or the parties enter into an approved agreement. Someone preparing a settlement, however, must follow the Medicare, Medicaid, and Workers’ Compensation Board procedures in effect at that time.

How Can a New York Workers’ Compensation Lawyer Help?

Medicare, Medicaid, and workers’ compensation involve separate agencies and payment systems. A New York workers’ compensation lawyer can help determine how those rules apply to a particular claim or proposed settlement.

Legal guidance may be especially useful when:

• A workers’ compensation claim was disputed, but Medicare or Medicaid paid for related treatment.
• Medicare has issued a conditional-payment notice or repayment demand.
• The worker is already enrolled in Medicare and expects ongoing treatment.
• The worker may qualify for Medicare within 30 months.
• The settlement closes future medical benefits.
• The medical allocation appears too small for the expected treatment.
• The agreement does not clearly explain how future medical care will be handled.
• The insurer proposes language that shifts Medicare-related responsibility to the worker.

A lawyer can also help review which Medicare payments are connected to the work injury, determine whether a WCMSA should be considered, and explain what medical benefits the worker will give up under the agreement.

Frequently Asked Questions

Can Medicare refuse to pay for treatment related to my work injury?

Yes. Because workers’ compensation is generally the primary payer for work-related treatment, Medicare may deny payment when workers’ compensation is responsible. After a settlement closes medical benefits, Medicare may also decline to pay for related treatment until the properly allocated settlement funds have been exhausted and documented.

What if Medicare paid my medical bills before my workers’ compensation claim was approved?

Those payments should be reviewed if the claim later results in a settlement, judgment, award, or other payment. Medicare may seek repayment of conditional payments related to the work injury.

Can I settle my workers’ compensation claim if I receive Medicaid?

Yes. Medicaid coverage does not automatically prevent a settlement. However, Medicaid-paid expenses, future payment responsibility, and any effect on continued eligibility should be reviewed before the agreement is finalized.

Will Medicare pay for treatment after I settle my medical benefits?

Possibly, but not necessarily right away. If CMS approved a Medicare Set-Aside, those funds generally must be properly spent and accounted for before Medicare begins paying for related care. When a settlement was not submitted for CMS approval, Medicare may examine whether its interests were adequately protected and could deny payment or seek recovery up to the full settlement amount.

Does every workers’ compensation settlement require a Medicare Set-Aside?

No. Federal law does not require every settlement to include a WCMSA or require every proposal to be submitted to CMS. However, Medicare’s interests still must be considered whenever a settlement includes compensation for future medical expenses that Medicare might otherwise cover.

Review Your Benefits With Brandon J. Broderick, Attorney at Law

The hardest part of a workers’ compensation claim can come when several benefit systems are dealing with the same medical care. Medicare may have paid some bills, Medicaid may have processed others, and the workers’ compensation carrier may maintain a different payment record.

Sorting out those records before settlement can provide a clearer picture of what you are agreeing to, especially when future medical treatment is involved. Brandon J. Broderick, Attorney at Law, can review your claim and explain how Medicare, Medicaid, and workers’ compensation may affect the proposed agreement.

If something in your settlement paperwork does not make sense, contact us today. We will take a closer look with you.