WCMSA Review Thresholds: The $25,000 and $250,000 Rules and What They Actually Decide

The Workers' Compensation Medicare Set-Aside review threshold is the single most-asked question at the start of any defense settlement that touches Medicare's interests. Two numbers appear in every conversation: $25,000 and $250,000. The numbers themselves are well known. What they actually decide — who is in the review pool, what voluntary submission gets you, and how the analysis changes when a case sits beneath the threshold — is less universally understood, and the WCMSA Reference Guide v4.5 (April 2026) makes specific changes to the surrounding language that practitioners need to absorb.

This guide is a structural walk through the review thresholds as they currently operate. It covers the two numerical thresholds, the two beneficiary populations they apply to, the "reasonable expectation of Medicare entitlement within 30 months" test, what changed in the most recent Reference Guide revisions, and the practical implications for files that sit above and below the line.

The Two Thresholds in Plain Language

The CMS workload review thresholds are voluntary review eligibility cutoffs, not statutory caps and not safe harbors. They define which proposed WCMSAs the agency will accept for Workers' Compensation Review Contractor (WCRC) review when the parties choose to submit.

Threshold #1: $25,000 for current Medicare beneficiaries. A WCMSA is eligible for CMS review when the claimant is currently entitled to Medicare and the total settlement (including indemnity, medical, attorney fees, and any allocations) is greater than $25,000.

Threshold #2: $250,000 for non-beneficiaries with reasonable expectation of Medicare entitlement within 30 months. A WCMSA is eligible for CMS review when the claimant has a "reasonable expectation" of becoming Medicare-entitled within 30 months of the settlement date and the total settlement amount is greater than $250,000.

Both thresholds use the total settlement amount as the trigger, not the WCMSA dollar value alone. A $30,000 settlement that includes a $4,000 WCMSA is review-eligible (under the $25,000 beneficiary threshold), while a $240,000 settlement to a non-beneficiary with a $200,000 WCMSA is not, because the total settlement is below $250,000.

Who Counts as a "Current Medicare Beneficiary"?

A current Medicare beneficiary is anyone receiving Medicare benefits at the time of settlement under any of the four Medicare-entitlement routes:

• Age 65 or older
• Receiving Social Security Disability Insurance (SSDI) benefits and past the 24-month SSDI-to-Medicare waiting period
• End-stage renal disease (ESRD) — entitled to Medicare without waiting period after the third month of dialysis (or earlier with a transplant)
• Amyotrophic lateral sclerosis (ALS) — entitled to Medicare in the month of SSDI entitlement, with no 24-month waiting period

For settlement purposes, "currently entitled" means the claimant has an active Medicare card or has been notified of approval. Pending applications do not count toward current entitlement; they count toward the reasonable-expectation test described below.

The "Reasonable Expectation Within 30 Months" Test

The 30-month test is the most-litigated piece of the threshold framework, because it triggers a $250,000 threshold that most material settlements clear. The Reference Guide v4.5, Section 8.1, lists the conditions under which CMS treats a claimant as having a reasonable expectation of Medicare entitlement within 30 months. A claimant satisfies the test if any of the following apply:

• Has applied for SSDI benefits (whether approved, pending, or even denied — application alone is the trigger)
• Has been denied SSDI but anticipates appealing or refiling
• Is in the process of appealing or refiling for SSDI benefits
• Is age 62 years and 6 months or older (age 65 plus 30 months back)
• Has end-stage renal disease but is not yet Medicare-entitled based on ESRD status

Two practitioner notes follow. First, the SSDI application is its own trigger — independent of the merits. A claimant with a pending SSDI application that is unlikely to succeed still counts as having a reasonable expectation of entitlement, because the language of Section 8.1 is application-based rather than merits-based. Second, the age trigger does the most work in real settlements: any claimant 62 years and 6 months or older falls into the reasonable-expectation pool automatically, regardless of disability status, because age 65 is reachable within 30 months.

What Voluntary Submission Actually Buys You

Submission of a review-eligible WCMSA to the WCRC is voluntary. CMS does not require submission, and there is no statutory consequence for not submitting. What submission buys is finality: a WCRC approval letter functions as a CMS finding that the proposed allocation, when funded and properly administered, satisfies Medicare's interests in future medical care for the work injury.

The finality is not absolute. CMS has historically reserved the right to revisit allocations that were procured by fraud or material misrepresentation, and Medicare Secondary Payer recovery actions remain possible in narrow circumstances even after WCRC approval. In practice, however, an approved WCMSA that is funded as recommended and administered consistent with the Reference Guide is the strongest available defense against post-settlement Medicare recovery exposure.

What submission does not buy:

• Speed. WCRC review averages 30 to 60 calendar days from complete submission, with longer queues during busy periods. Settlements on tight clocks frequently close without WCRC review and rely on documented file work.
• Certainty about the dollar value. A submission may be approved at the proposed amount, countered at a higher amount, or returned with a development request for additional records. Defense teams that need a fixed allocation dollar before settlement typically cannot rely on a submission outcome to anchor the negotiation.
• Coverage of liability or no-fault settlement components. WCMSA review applies only to the workers' compensation settlement amounts. LMSAs (liability MSAs) remain outside the formal review program — see our discussion in the practitioner notes section below.

What Sits Beneath the Threshold

A non-review-eligible case is not a no-MSA case. The Reference Guide is explicit: parties to any workers' compensation settlement that resolves future medical exposure are responsible for considering Medicare's interests, regardless of whether the case is eligible for voluntary review. The thresholds are workload-management cutoffs the agency uses to allocate WCRC review capacity, not exemptions from the underlying obligation.

Practitioners at non-review-eligible cases face three workflow paths.

Path 1: Documented internal allocation. The defense team prepares an internal MSA allocation memorandum analyzing future Medicare-covered care related to the work injury, applies appropriate fee-schedule pricing, and funds an MSA at the analyzed amount. The deliverable is held in the settlement file, not submitted to CMS. This is the most common path for review-eligible settlements where the parties choose not to submit, and it is the only path for settlements below the thresholds.

Path 2: Documented $0 position under Section 4.2. Where the case meets the conditions in WCMSA Reference Guide Section 4.2 — past-medicals-only consideration, denied claim with no non-investigational payments, or merits ruling that no further benefits are owed — a documented $0 position is available. Note: CMS no longer reviews $0 WCMSA proposals as of July 17, 2025 (see our companion guide on the end of $0 WCMSA reviews). The $0 file lives in the settlement record without an agency stamp.

Path 3: Funded allocation without submission. Settlements that exceed the threshold but settle on a tight clock often follow this path: the parties prepare a full WCMSA report, fund it at the analyzed amount, and elect not to submit because the settlement timeline does not accommodate WCRC review. The WCMSA dollar value is fixed in the settlement agreement, the report is held in the file, and Section 111 reporting (April 2025 expansion) flows on the funded amount.

What Changed in WCMSA Reference Guide v4.5 (April 2026)

The April 2026 Reference Guide refines but does not change the threshold values. Key revisions surrounding the threshold framework include:

Confirmation that the thresholds are administrative, not statutory. The agency reiterates that the thresholds reflect WCRC capacity allocation and do not relieve parties of their statutory duty to consider Medicare's interests in any settlement that closes future medical exposure related to a work injury.

Continued integration of Section 111 reporting expansion. The seven new Section 111 fields effective April 2025 (MSA Amount, MSA Period, lump/annuity indicator, deposit amounts, administrator type, administrator EIN, and the related fields) flow on every WCMSA — review-eligible or not. The reporting obligation does not depend on threshold eligibility. See our reference on the Section 111 expansion for the field-by-field walkthrough.

Continued absence of LMSA (liability MSA) review pathway. The Reference Guide remains specific to workers' compensation settlements. Liability MSAs continue to operate without a formal CMS review pathway, and proposals submitted under the WCMSA review process are returned. Practitioners working liability cases with future-medical exposure operate under MSP statutory obligations without a voluntary-review safety net.

Section 9.4.3 treating-provider preference. The treating-provider preference language in 9.4.3, refined in v4.4 alongside the $0 changes, applies to review-eligible cases and is increasingly being applied as a methodology standard in non-submitted cases too. A WCRC reviewer's preference for treating-provider statements over evidence-based guideline minimums is the same analytical posture a defense MSA shop should adopt for a non-submitted file destined for the settlement record.

Worked Example: Threshold Analysis on Three Cases

The following three cases show how the threshold framework operates on common settlement profiles.

Case A: Beneficiary, $40,000 settlement, $6,000 WCMSA

A 67-year-old retiree with a settled left-knee injury. Medicare since age 65. Total settlement of $40,000, of which $6,000 is the proposed WCMSA, $14,000 is past medical reimbursement, $20,000 is indemnity.

Threshold status: Review-eligible (current beneficiary, total > $25,000).

Submission analysis: A $6,000 WCMSA on a clean, single-injury, well-documented file is a candidate for submission. The WCRC may approve as proposed, counter modestly, or develop. The cost of submission is the 30-to-60-day review timeline. If the settlement is on a tight clock and the file is well documented, a non-submitted defensible allocation is a reasonable alternative.

Case B: 63-year-old non-beneficiary, $180,000 settlement, $40,000 WCMSA

A 63-year-old (3-and-a-half years from age 65, so well inside the reasonable-expectation 30-month window). Total settlement of $180,000.

Threshold status: Not review-eligible — claimant has a reasonable expectation of Medicare entitlement within 30 months (age 62.5+ trigger), but the total settlement of $180,000 is below the $250,000 threshold for that population.

Submission analysis: Voluntary submission is unavailable. The defense MSA shop prepares the allocation, the parties fund the WCMSA, and the file is held internally. The Section 111 report flows on the $40,000 funded amount.

Case C: 50-year-old SSDI applicant, $300,000 settlement, $90,000 WCMSA

A 50-year-old claimant with a pending SSDI application. Total settlement of $300,000.

Threshold status: Review-eligible (reasonable expectation triggered by SSDI application; total settlement > $250,000).

Submission analysis: Voluntary submission is available and is the more common path on a $300,000 settlement, where the cost of an unfavorable WCRC counter is meaningful. The defense team submits, expects 30 to 60 days for review, and is prepared to respond to a development request or counter-offer. If the settlement is time-pressured, the alternative is a non-submitted funded allocation with a defensible file.

Practical Implications for Defense Counsel and Settlement Planners

Triage the threshold question at intake. The first conversation on any WC settlement that touches Medicare's interests should establish (a) is the claimant a current beneficiary, (b) does the claimant satisfy the 30-month reasonable-expectation test, and (c) is the total settlement above the relevant threshold. The combination determines the available pathways.

Do not conflate threshold status with substantive obligation. A non-review-eligible case still requires Medicare-interest analysis. The threshold determines whether voluntary review is available; it does not determine whether an MSA is required.

Plan for non-submitted cases as the dominant workflow. Most workers' compensation settlements close without WCRC submission, either because the case is below the threshold or because the timeline does not accommodate review. A defense practice that designs its MSA workflow around the submitted-case happy path is over-investing in voluntary-review preparation and under-investing in the file work that protects non-submitted settlements.

For non-beneficiaries near 62.5, recheck on the settlement date. A claimant who is 62 years and 4 months at intake and 62 years and 8 months at settlement crosses the reasonable-expectation threshold during the engagement. Threshold analysis should be revisited if intake-to-settlement spans more than a few months.

Section 111 reporting flows on every WCMSA. Whether or not the case is review-eligible, the funded WCMSA dollar value is reported on the settlement-related Section 111 file with the seven new fields populated. A non-submitted case is not a non-reported case.

Document the threshold analysis in the file. The settlement file should contain a one-page memorandum identifying the beneficiary status, the 30-month analysis, the total settlement, and the threshold conclusion. The memorandum is the contemporaneous record that the parties analyzed the threshold and chose the appropriate pathway. In a future MSP audit or recovery action, the threshold analysis is the first document the agency or contractor asks for.

Sources

• WCMSA Reference Guide v4.5 (April 13, 2026) — CMS — particularly Section 8.1 (review thresholds and reasonable expectation conditions) and Section 4.2 (when a WCMSA is not necessary)
• Workers' Compensation Medicare Set-Aside Arrangements — CMS
• What's New — Workers' Compensation Medicare Set-Aside Arrangements (CMS)
• Section 111 NGHP User Guide — CMS Coordination of Benefits & Recovery

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For threshold-eligible cases that need a 48-hour deliverable, or for non-eligible cases that need a defensible internal allocation memorandum, see zicron.claims/msa. A redacted sample with the Section 111 reporting block is at zicron.claims/msa/sample.