Many disabled people rely on the government to help cover the cost of certain necessities. Needs-based government programs can assist with monthly income, payments for medical services, and other things a person might not otherwise be financially able to handle. However, these programs have strict income-related eligibility requirements. Without careful planning, a settlement award can cause a person to lose access to much-needed benefits.
Which Government Programs Could Be Affected by a Settlement?
Supplemental Security Income (SSI) and Medicaid are needs-based government programs, so your award may adversely affect your eligibility to receive these programs’ benefits. SSI provides a guaranteed standard of income to people who are age 65+, blind, or disabled with limited income and resources. Medicaid is a federal and state government program that provides medical care coverage for low-income individuals and families and for the elderly and disabled. Medicaid benefits can cover prescription medication, transportation, home-based care, and other items.
When determining eligibility, certain assets like an individual’s home and automobile are not counted as available resources. However, a person who reaches a certain financial threshold in his or her savings account is not likely eligible for SSI and Medicaid. So, when the proceeds from a settlement arrive, that lump sum of money in the bank can mean a person no longer complies with the requirements for eligibility.
What Can Be Done to Comply with Medicaid and SSI?
A special needs trust allows a person to use a portion of the settlement proceeds for items that can enhance quality of life without compromising his or her eligibility for SSI, Medicaid, and other public benefits. A special needs trust may be a consideration if you are currently receiving SSI or Medicaid or anticipate needing these benefits and are approaching a settlement.
There are different types of special needs trusts, but each type enables a disabled individual to receive settlement proceeds while maintaining government benefits eligibility.
Compliance Doesn’t Stop Here
Depending on your individual situation, there may be additional factors to consider when a settlement is on the horizon and you’re receiving (or plan to receive) government benefits. For example, Medicare is considered by law to be a “secondary payer” for injury, illness, or disease suffered by those involved in a workers’ compensation or liability lawsuit. For those with Medicare who are approaching settlement, a Medicare set-aside (MSA) may be the best route to comply with rules regarding the protection of Medicare’s interests. In Part II of this series, I will be covering the benefits of MSAs in complying with Medicare.
Feel free to comment below with any questions or contact my settlement planning firm, Milestone Consulting, for assistance.
About John Bair
John Bair has guided thousands of plaintiffs through the settlement process as co-founder of Milestone Consulting, LLC, a broad-based settlement planning and management firm. Milestone’s approach is comprehensive and future-focused. John’s team has guided thousands of clients by taking the time to understand the complexities of each case. They assess the best outcome and find the path that enables each client to manage their many needs. Read more about Milestone Consulting at http://milestoneseventh.com/.
A West Point graduate where he served as captain and military aviator, John Bair continues his commitment to our country through his efforts within the settlement planning industry. He has represented families of victims lost in the Flight 3407 crash, offered pro bono services to the families of 9/11 victims and drafted the first consumer protection bill for plaintiffs (H.R. 3699).