CMS freezes its Medicare recovery threshold for 2027, the eleventh straight year at $750, while inflation quietly shrinks its value and the hard workers' compensation questions sit above the line.
A frozen number is still news. This is the eleventh consecutive year the liability threshold has sat at $750, and the alert, like the 2026 alert before it, now says the figure holds "until further notice." Read alongside a decade of inflation and rising collection costs, the alert says a good deal about how Washington sees the intersection of Medicare and workers' compensation, and about what it is not prepared to do.
What the Alert Says
The one-page alert, issued by the CMS Financial Services Group, rests on section 1862(b) of the Social Security Act, 42 U.S.C. § 1395y(b). CMS reports that it reviewed the cost of collecting Medicare's conditional payments against recovery amounts and made four determinations:
• Liability (physical trauma). The threshold remains $750 until further notice.
• No-fault and workers' compensation. CMS maintains the $750 threshold, but only where the no-fault insurer or workers' compensation entity does not otherwise have ongoing responsibility for medicals.
• Effect. Entities need not report qualifying settlements, and CMS will not seek recovery on them.
• Carve-out. The liability threshold does not apply to settlements for alleged ingestion, implantation, or exposure claims.
The statutory engine is Section 202 of the Medicare IVIG Access and Strengthening Medicare and Repaying Taxpayers Act of 2012 (the SMART Act), Pub. L. 112-242, signed January 10, 2013, and codified at 42 U.S.C. § 1395y(b)(9). It requires the Secretary to calculate and publish a single threshold amount not later than November 15 before each year, set so that the average cost of collecting conditional payments is at least equal to what Medicare would recover. It also directs the Secretary to report to Congress on whether similar thresholds should apply to workers' compensation and no-fault obligations.
A Number Frozen in Time
The threshold's history is short and revealing. The liability figure began at $300, rose to $1,000 in 2014, and stayed there through 2016. In its October 2016 computation, CMS kept the liability threshold at $1,000 and, for the first time, established a separate $750 settlement threshold for workers' compensation and no-fault cases without ORM. Effective January 1, 2017, the liability figure dropped to $750 to match. It has not moved since. A Verisk analysis of the Section 111 user guide noted in 2026 that CMS had held the $750 figure for ten consecutive years; the 2027 alert makes it eleven.
Figure: CMS recovery thresholds, 2013 to 2027, against $750 in 2017 dollars adjusted by the CPI-U.
Four trends stand out.
First, inflation is doing CMS's work for it. Using annual CPI-U averages (245.12 for 2017 and roughly 322.6 for 2025), $750 in 2017 dollars equals about $987 today. Holding the nominal figure flat is a real-dollar cut of roughly 24 percent. Each year more small claims cross the line, the reporting burden grows, and Medicare's recovery net quietly widens, without anyone announcing a policy change.
Second, the cost of collecting keeps climbing. The SMART Act formula ties the threshold to what it costs Medicare to recover. CMS's 2018 report to Congress put the collection cost at $323 per case. The 2023 report put the workers' compensation figure at $306. For 2024, CMS used $315, and the 2025 report calculated approximately $339. CMS then matches that cost to the settlement band whose average Medicare demand meets or exceeds it. Rising collection costs would ordinarily push the threshold up, yet the agency has chosen stability over recalibration.
Third, "until further notice" signals permanence. Earlier alerts framed the threshold year by year. Verisk's review of the 2025 alert, for example, quoted language that the liability threshold would remain at $750 beginning January 1, 2025. The 2026 and 2027 alerts drop the calendar framing in favor of "until further notice." Practitioners should read that as a soft announcement that annual review has become a formality.
Fourth, CMS is finally on time. The statute says November 15. According to the dates on CMS's Non-Group Health Plan Recovery page, the alerts for 2020 through 2026 all issued after that deadline, including the 2024 alert, released February 14, 2024, weeks into the year it governed, and the 2025 alert, released December 16, 2024. The November 12, 2026 alert is the first timely release since the 2019 threshold was announced on November 15, 2018. CMS's listing for 2027 shows only the alert; the statute also calls for a report to Congress with the underlying computation, which I have not located as of this writing.
Where the Line Does Not Reach
For workers' compensation, the exceptions matter far more than the rule.
Ongoing responsibility for medicals. The $750 threshold for workers' compensation applies only where the carrier has no ORM. In most accepted New Jersey claims, the carrier is paying medical bills. Those cases are reported and tracked regardless of any settlement figure.
Exposure, ingestion, and implantation. The alert's carve-out speaks only to liability settlements, but CMS's Section 111 guidance goes further. As Verisk noted in reviewing the 2025 alert, the NGHP User Guide states that the threshold does not apply to non-trauma workers' compensation settlements. Occupational disease claims, including asbestos, silica, chemical exposure, and hearing loss, fall outside the safe harbor. These are precisely the claims most likely to involve older workers who are already Medicare beneficiaries.
Medicare Set-Asides are a separate universe. The $750 threshold governs reporting and recovery of past conditional payments. It has nothing to do with whether future medical expenses must be protected through a Workers' Compensation Medicare Set-Aside, which is governed by CMS's separate review thresholds and by the regulations at 42 C.F.R. §§ 411.40 to 411.47.
Two Systems, One Patient
The recovery threshold is a small window into a large structural problem. Medicare and workers' compensation were never designed to work together. Medicare excluded services payable under workers' compensation from the start, and the Medicare Secondary Payer (MSP) provisions of 42 U.S.C. § 1395y(b)(2) make Medicare a secondary payer to workers' compensation, liability, and no-fault coverage. When a claim is disputed and Medicare pays first, the payment is only conditional. The regulations at 42 C.F.R. Part 411, Subpart C treat a lump-sum compromise as a workers' compensation payment for Medicare purposes even when liability is denied, and they apportion it to determine what Medicare may recover. Mandatory insurer reporting under Section 111, 42 U.S.C. § 1395y(b)(8), put every carrier and self-insured employer in the middle of that recovery machine.
The courts have spent two decades sorting out the friction. In Taransky v. Secretary of HHS, 760 F.3d 307 (3d Cir. 2014), a woman who tripped at a shopping center in Mt. Laurel, New Jersey, settled her Superior Court case and obtained a state court order allocating nothing to medical expenses. The Third Circuit held that the non-adversarial allocation did not bind Medicare, and that New Jersey's collateral source statute did not shield the settlement from Medicare's $18,401.41 claim. Taransky binds the federal courts in New Jersey and is a warning that a label in a settlement order is not a shield.
Compare Bradley v. Sebelius, 621 F.3d 1330 (11th Cir. 2010), where a Florida probate court, after notice to Medicare and a hearing on the merits, allocated the settlement among the claims. The Eleventh Circuit held the Secretary bound by that allocation and limited Medicare's recovery to $787.50. That figure is barely above today's threshold, a reminder of how much administrative effort can be spent over very little money. Bradley also illustrates why the threshold exists: litigation over a few hundred dollars benefits no one.
The stakes rose with Humana Medical Plan, Inc. v. Western Heritage Insurance Co., 832 F.3d 1229 (11th Cir. 2016), which held that a Medicare Advantage organization may sue a primary payer under the MSP private cause of action and that double damages are mandatory. Since Humana, a carrier that settles without resolving a Medicare Advantage plan's claim risks paying twice the amount. The $750 threshold addresses traditional Medicare's recovery program, and practitioners should not assume Medicare Advantage plans will observe the same safe harbor.
New Jersey practice feels all of this most acutely in the lump-sum settlement under N.J.S.A. 34:15-20. A Section 20 settlement closes the claim, ends the carrier's medical responsibility, and so converts an ORM case into a non-ORM case at the moment of approval. The Division's own Order Approving Settlement with Dismissal form asks for the petitioner's Medicare status for that reason. Small Section 20 settlements can fall at or under $750, but most will not, and an occupational disease settlement will not qualify for the safe harbor at any amount.
Practice Pointers
• Confirm the claim is physical trauma-based and that no ORM remains before relying on the $750 threshold.
• Do not apply the threshold to occupational disease, exposure, ingestion, or implantation claims.
• Remember that the threshold governs reporting and past conditional payments, not set-aside obligations for future medicals.
• Check separately for Medicare Advantage and Part D plan claims, which carry the double damages exposure recognized in Humana.
• If allocating a settlement, build an adversarial record on the merits; Bradley and Taransky show the difference between an allocation that binds Medicare and one that does not.
• Calendar the next alert. The statute calls for publication by November 15, 2027, and the 2027 timeliness may or may not repeat.
The Larger Lesson
The SMART Act was a bipartisan effort to make a cumbersome recovery system more predictable, and the threshold was one of its quieter tools. A decade later, the tool has hardened into a fixed number that erodes a little more each year. That is not a crisis. It is a symptom. Every dollar Medicare chases from a small workers' compensation settlement is a dollar shuffled between two public-interest systems, through private carriers and recovery contractors, at administrative cost to all of them, including an injured worker who waits for closure.
For years I have argued that the medical side of workers' compensation should be integrated with a national health program rather than fought over at the edges. The 2027 recovery threshold, unchanged and now indefinite, reminds us how much effort goes into deciding who pays, rather than into the care itself. Until Congress takes up that larger question, practitioners will keep working within a $750 line that is worth less every year.
Sources
1. Centers for Medicare & Medicaid Services, Alert: 2027 Recovery Thresholds for Certain Liability Insurance, No-Fault Insurance, and Workers' Compensation Settlements, Judgments, Awards or Other Payments (Nov. 12, 2026).
2. Centers for Medicare & Medicaid Services, Non-Group Health Plan Recovery (threshold alerts and computations by year).
3. Centers for Medicare & Medicaid Services, Alert: 2026 Recovery Thresholds (Nov. 18, 2025).
4. Centers for Medicare & Medicaid Services, Report to Congress: Computation of Annual Recovery Thresholds, 2025.
5. Centers for Medicare & Medicaid Services, Report to Congress: SMART Act Recovery Thresholds 2023.
6. U.S. Dep't of Health & Human Services, Report to Congress: Computation of Annual Liability Insurance, No-Fault Insurance, and Workers' Compensation Settlement Recovery Threshold (Feb. 2018).
7. Centers for Medicare & Medicaid Services, Computation of Annual Liability Insurance Settlement Recovery Threshold (Oct. 2016).
8. Medicare IVIG Access and Strengthening Medicare and Repaying Taxpayers Act of 2012, Pub. L. No. 112-242, 126 Stat. 2374 (2013).
9. 42 U.S.C. § 1395y (Medicare as secondary payer; § 1395y(b)(8) reporting; § 1395y(b)(9) recovery threshold).
10. 42 C.F.R. Part 411, Subpart C, §§ 411.40 to 411.47 (workers' compensation).
11. Taransky v. Secretary of the U.S. Department of Health & Human Services, 760 F.3d 307 (3d Cir. 2014).
12. Bradley v. Sebelius, 621 F.3d 1330 (11th Cir. 2010).
13. Humana Medical Plan, Inc. v. Western Heritage Insurance Co., 832 F.3d 1229 (11th Cir. 2016).
14. N.J.S.A. 34:15-20 (Section 20 lump-sum settlements).
15. N.J. Division of Workers' Compensation, WC(DO)-370, Order Approving Settlement with Dismissal.
16. Verisk, CMS Retains Its $750 Low Dollar Threshold for 2025.
17. Verisk, CMS Releases Section 111 NGHP User Guide Version 8.3.
18. WorkersCompensation.com, Recent Medicare Compliance Alerts Affecting Workers' Compensation Claims.
19. MIT Institutional Research, Consumer Price Index (CPI-U) (BLS annual averages).
Recommended Citation
Jon L. Gelman, The $750 Line Holds, Workers' Compensation (workers-compensation.blogspot.com) (Nov. 15, 2026),
Jon L. Gelman of Wayne, NJ, is the author of NJ Workers' Compensation Law (West-Thomson-Reuters) and co-author of the national treatise Modern Workers' Compensation Law (West-Thomson-Reuters).
Blog: Workers' Compensation
LinkedIn: JonGelman
LinkedIn Group: Injured Workers Law & Advocacy Group
Author: "Workers' Compensation Law" West-Thomson-Reuters
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© 2026 Jon L Gelman. All rights reserved.
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