You can open a Medicare Set-Aside account at almost any bank or credit union, provided it’s an interest-bearing account held entirely separate from your personal funds, or you can hand the job to a professional administrator who opens and runs the account for you. Those are the two paths, and the right one depends on the size of your settlement, whether it pays out as a lump sum or an annuity, and how much of the record-keeping you want to do yourself.
Opening the Account Yourself at a Bank or Credit Union
Self-administration means you choose the financial institution and hold the account in your own name. CMS sets two firm rules for the account: it must earn interest, and it must be completely separate from any personal savings or checking account you already have.1Centers for Medicare & Medicaid Services. Self-Administration and You: A Beneficiary Toolkit for Workers’ Compensation Medicare Set-Aside Arrangements CMS also recommends picking an account that doesn’t charge fees when the balance runs low and that lets you write checks, because you’ll pay medical providers directly from it.
National banks, community banks, and credit unions can all handle this. When you visit a branch, ask specifically about opening a custodial or fiduciary account titled to reflect its MSA purpose. It helps to ask whether the branch has experience with settlement-restricted or court-ordered accounts, since not every teller or personal banker has seen one. Interest rates tend to be modest, similar to a standard savings account, and any interest the account earns stays in the fund for future injury-related care.2Centers for Medicare & Medicaid Services. WCMSA Reference Guide Version 4.4
CMS also says the account should be insured by the FDIC.1Centers for Medicare & Medicaid Services. Self-Administration and You: A Beneficiary Toolkit for Workers’ Compensation Medicare Set-Aside Arrangements Standard FDIC coverage for a single depositor at one insured bank is generally $250,000.3FDIC. Trust Accounts If your MSA is larger than that, talk with the bank about spreading funds across accounts at different institutions so the entire balance stays insured. Credit unions carry equivalent coverage through the National Credit Union Administration.
Using a Professional Administrator Instead
If handling the paperwork, provider payments, and yearly Medicare reporting sounds like more than you want to take on, professional administration companies will do it for you. They open the account under their own custodial structure, process your medical bills, pay providers directly, and file the required annual attestation with Medicare. Some also apply Medicare fee schedules to negotiate lower charges on your bills, which can make the fund last longer.
Fees vary. Some companies charge a one-time flat fee; others price by settlement size or the expected length of administration. Over the life of an account, costs generally run from about $1,000 to $10,000 or more. Those fees cannot be paid from the MSA itself. CMS treats administrative costs as a separate item to be negotiated between the settling parties, so the money has to come from another source, typically the general portion of your settlement.2Centers for Medicare & Medicaid Services. WCMSA Reference Guide Version 4.4
How to Choose Between the Two
Self-administration costs nothing beyond ordinary bank fees, but it puts every responsibility on you: paying providers, tracking receipts, filing an annual attestation with Medicare, and keeping the account clean of any non-allowable expense. Professional administration trades money for that workload, along with a layer of compliance experience.
Professional help tends to be worth the price when the settlement is large, when ongoing prescription drug management is part of the picture, or when detailed financial record-keeping isn’t realistic for you. Self-administration tends to make sense for smaller settlements with straightforward, predictable care.
Funding method matters too. If your MSA is paid as a lump sum, the full balance lands in the account at closing and you draw it down over time. If it’s structured as an annuity, a seed deposit goes in at settlement and further payments arrive periodically, usually annually, from the annuity. An annuity-funded MSA needs an account that can receive recurring deposits, and CMS uses separate annual attestation forms for lump-sum and structured accounts, so the reporting differs a bit depending on funding type.4Centers for Medicare & Medicaid Services. WCMSA Self-Administration With a structured account, if a year’s medical bills outrun the balance, you may have to wait for the next annuity payment to replenish the fund.
What to Bring When You Open the Account
Whether you walk into a branch or enroll with an administrator, gather these documents ahead of time:
- Your Medicare Beneficiary Identifier, the 11-character code on your Medicare card, which the institution uses to title and track the account.5Centers for Medicare & Medicaid Services. Understanding the Medicare Beneficiary Identifier (MBI) Format
- The signed settlement agreement, stating the exact dollar amount designated for the MSA and separating it from the general settlement payout.
- Your CMS approval letter, if CMS reviewed the WCMSA proposal, showing the total MSA amount and, for a structured settlement, the seed money and annual deposit figures.
- Your Social Security number, needed for tax reporting on any interest the account earns.
- IRS Form W-9, which the bank will usually ask you to complete to certify your taxpayer identification number.6Internal Revenue Service. Form W-9 (Rev. March 2024)
- A copy of the workers’ compensation board order or court-approved settlement, so the bank can verify the source of the funds and understand the fiduciary nature of the deposit.
If someone other than the injured worker is opening the account, such as a legal guardian or someone with power of attorney, they must also bring court papers or other documentation showing the legal relationship.2Centers for Medicare & Medicaid Services. WCMSA Reference Guide Version 4.4
Funding the Account Once It’s Open
After the account is set up, the insurance carrier or defense attorney sends the settlement funds, typically by wire or by check made payable to the MSA account title. Once the money arrives and any custodial paperwork is signed, the institution issues confirmation with the account and routing numbers.
One step often gets missed. CMS approval of your WCMSA amount does not fully take effect until CMS receives a copy of the final executed settlement agreement showing the MSA was funded for the full approved amount.2Centers for Medicare & Medicaid Services. WCMSA Reference Guide Version 4.4 Without that proof on file, Medicare can deny injury-related claims entirely rather than limiting the denial to the approved MSA amount. You can submit the final agreement through the WCMSA Portal on Medicare.gov or mail it to the WCMSA Proposal/Final Settlement address in Oklahoma City listed in the CMS Reference Guide.
A Note on CMS Review
Not every workers’ compensation settlement gets reviewed by CMS. CMS reviews a proposed WCMSA amount when the beneficiary is already on Medicare and the total settlement exceeds $25,000, or when the person is reasonably expected to enroll in Medicare within 30 months and the total settlement for future medicals, disability, or lost wages exceeds $250,000.2Centers for Medicare & Medicaid Services. WCMSA Reference Guide Version 4.4 CMS review is voluntary rather than legally required, but going through it gives you a documented figure to fund and reduces the chance of a later dispute. If your case wasn’t reviewed, you can still open the account the same way; you just won’t have an approval letter to bring along.