Income has been on most of our minds for the past year, as unemployment numbers rose (and keep rising), three rounds of stimulus checks hit our bank accounts, the stock market went wonky, and small business owners fretted over the future of their companies.
As these and other economic issues played out for months, there wasn’t much to do but buckle up and hope that we would come out on the other side relatively unscathed. But for those who rely on government programs to help with their living expenses, it had to be especially worrisome.
Millions of Americans receive benefits from state and federal programs to help cover their health care, food, shelter, and other basic needs. Supplemental Security Income (SSI) makes monthly payments to people who are age 65 or older, blind, or disabled and have few financial resources. Medicaid is a state-administered program that provides health coverage to eligible low-income adults, children, pregnant women, the elderly, and people with disabilities. There’s also SNAP, which provides an EBT card to pay for food; HUD, which provides federally assisted housing; CHIP, which provides low-cost health insurance coverage for children; and many others.
Helping people plan around these benefits programs is something we do every day in my line of work. That’s because eligibility for government benefits often hangs in the balance when a person is about to receive a personal injury settlement. I know; you would think that once a person is eligible for certain benefits, they’re locked in for life. Not so. Eligibility for certain programs like Medicaid and SSI is dependent on how much income a person receives each month. Crossing that threshold by receiving too much money equals no more benefits. So, it’s easy to imagine how a settlement could be a problem. In the eyes of Medicaid and SSI, an individual who receives a personal injury settlement doesn’t need those benefits anymore (except, more often than not, plaintiffs still really do need them, along with the money from their settlement, in order to life securely and comfortably).
There are planning tools we can put in place to allow personal injury plaintiffs to receive a settlement and keep their government benefits. They can maintain eligibility for SSI and Medicaid even after their lawsuit settlement comes in with the help of a special needs trust, ABLE account, spend down, or one of several other planning options that will keep them under the income threshold for eligibility. It just comes down to choosing which makes sense for each plaintiff’s unique situation. And while many things are uncertain right now, my team and I can at least continue to help injured individuals receive their government benefits and still get as much out of their settlement as possible.
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).