How Will a Personal Injury Settlement Impact My Social Security and Medicaid Benefits?

Dealing with an injury that hinders your ability to work is hard enough. Many seek Social Security benefits to help ease the difficulty in times where they are injured but the process is intricate and can come with many hardships in order to receive these benefits. If you were injured in an accident, you are now also able to file a personal injury lawsuit against the party responsible for the accident. This can hinder your benefits that were already difficult to receive and though a settlement may seem nice in a situation like this, you depend on your social security benefits more. Situations like these may seem troublesome but you can seek out the help of a personal injury attorney as well as an elder law attorney as this overlap of your benefits and injury can be complicated. The personal injury attorney can help with a lawsuit for the accident but an elder law attorney has in-depth knowledge of the Social Security benefits and what will affect these benefits so you are not put at risk of losing them.

How Will a Personal Injury Settlement Impact My Social Security and Medicaid Benefits?

How much liquid assets can you have for Medicaid and for SSI?

You may be worried about how much liquid assets you can have to be eligible for Medicaid and SSI which include cash, stocks, bonds, and CDs. In New York, In order to be eligible for Medicaid and SSI benefits, you can have up to $2,000 in liquid assets. If you have more, you won’t meet the requirements to receive these benefits, and if you are already receiving benefits, they may be compromised.This is something to keep in mind if you have Medicaid or SSI benefits and want to file for a personal injury lawsuit. Social Security doesn’t depend on work credits and is need-based so it depends on assets. If you receive a settlement for an accident, it can potentially put you over the asset threshold hindering your eligibility for your SSI benefits. It may seem unfair that your benefits may be suspended for receiving a no-fault settlement for your injury, but this is how the system works. These are a few things you should be aware of when deciding between a personal injury settlement or the benefits you need to meet ends meet.

2 Ways To Protect Your Settlement:

  1. A “spend down”: This option is when you spend a good amount of the settlement on resources that are exempt and needed for the benefit of the disabled recipient to ensure you are not over that asset threshold. This is a good option for those who want a simple way of using the settlement money but also helps them while ensuring they are still eligible for the benefits. Some exempt resources include household goods, personal effects, paying off your home mortgage, and paying off any existing debts. These are just a few items that are exempt from being counted as assets and your settlement fund can be used towards them to keep you under the asset threshold. 
  2. Set up a Special Needs Trust (SNT): This option is for those who don’t want to go through the trouble of spending the settlement fund but rather just set up a special needs trust. A special needs trust is a trust that is created for you to put your settlement money in and can be used for transportation, certain therapies, and nursing care without hindering your SSI or Medicaid benefits. This is good for those who want to use the funds to help recover from the accident without having to worry about their SSI benefits and Medicaid benefits being suspended, compromised or revoked. This trust can be set up with the help of an Elder Care attorney and will help make the process of protecting your settlement trouble-free. 

Both these options are great for those who are considering filing for a personal injury lawsuit, but do not want to risk losing their SSI and Medicaid benefits. You should make sure you proceed with either option that best fits your situation after obtaining a settlement for an accident when you are receiving these benefits. This will help reduce the risk of your benefits being suspended and protect your settlement. 

Speak with an Elder Law Attorney

An Elder Law attorney is informed of all current updates to the laws on Medicaid eligibility and SSI benefits eligibility. Unfortunately, Medicaid and SSI requirements can differ from state to state so it makes the process of applying and keeping your benefits even harder. An Elder Law attorney in your area will help simplify this process for you and advise you of all updates to the law and eligibility requirements creating fewer problems on this journey of Medicaid planning and other aspects surrounding Elder Law. Hiring an Elder Law attorney will also ensure that you're still eligible for your SSI and Medicaid benefits even if you plan on filing a personal injury lawsuit. Protecting your settlement will be a priority and an attorney will help you choose the right option to ensure you can still receive your settlement fund without hindering your benefit eligibility.

For further information on how a personal injury settlement may affect your Medicaid and SSI benefits please contact the Law Office of Inna Fershteyn at 718-333-2395 to obtain aid in options to protect your settlement fund and help with any of your Elder law needs.

Will an inheritance compromise my Medicaid Eligibility in NY?

Medicaid eligibility in NY is quite a serious concern, as it is very difficult to qualify for coverage given the laws and eligibility requirements. Many individuals find it difficult to fully understand the qualification laws and appeal to an elder care attorney for guidance. There is a capped limitation regarding the extent of liquid assets an individual may hold in order to remain eligible for Medicaid coverage in NY. A common inquiry pertains to the preservation of benefits even after receiving an inheritance, as there are several ways to do so. It is highly recommended that you schedule a conference with a well experienced elder care lawyer prior to accepting the inheritance, as this may jeopardize your Medicaid coverage and leave you without any healthcare. 

Will an inheritance compromise my Medicaid Eligibility in NY?

As most of you already know, the maximum value in assets an individual may hold is $2,000 in order to still qualify for full Medicaid coverage. This demonstrates financial need in paying for services, thus individuals within this income cap will qualify for much needed coverage. However, receiving an inheritance may compromise your ability to maintain your Medicaid eligibility because your assets will exceed the $2,000 limit. As a rule, all inheritance recipients must report their change in financial status to the Social Security Administration within 10 days of receiving the inheritance. Additionally, they must inform the Department of Children and Families of this inheritance. Individuals must explain how it is that they will utilize this inheritance and what the assets would be used for. 

If Inheritance is Large and Medicaid Coverage is No Longer Necessary:

In the case that your inheritance is a grand quantitative sum, you might realize that you do not require Medicaid anymore because you can use your inheritance towards your medical bills and expenses. You are encouraged to inform Medicaid services that you would like to disenroll from the program, as you no longer have such a prominent financial need. Once this step is done, the Medicaid coverage will cease and you will be responsible for paying for the expenses independently. Additionally, Medicaid may ask you to pay back the exact amount of money they provided for you during the period in which you were no longer eligible for the coverage. If you inform Medicaid in advance prior to receiving the inheritance, then you will be able to avoid paying the bill that Medicaid will send you as reparations for the financial services they provided after you received your large inheritance. 

If Inheritance is Small and you Still Need Medicaid:

Given that the inheritance is not enough to cover all of your medical expenses, you may want to maintain your Medicaid coverage. In this instance, the calendar month is what will determine if you are able to maintain both your inheritance and your coverage. The rules dictate that an individual must not have more than $2,000 in their bank account by the end of the month. This implies that if an individual receives an inheritance of multiple thousands or hundred thousands in the beginning of the calendar month, they may still have enough time to spend it or to arrange a meeting with an elder care attorney. However, if the individual receives this inheritance at the end of the month, such as March 25th, they will not have much time to allocate the funding and still qualify for Medicaid. An elder care attorney can guide you and advise you on the best actions to take in maintaining both your inheritance and Medicaid, while still following the rule regarding not exceeding $2,000 in assets monthly. 

Methods of Preserving Medicaid Benefits even after receiving Inheritance:

  • Spend Down: A common method of maintaining your Medicaid coverage even after receiving an inheritance pertains to the spend down method. Medicaid recipients must spend down their recently obtained inheritance in order to requalify for Medicaid coverage. For individuals who have a large inheritance, it would be nearly impossible to spend all that money in such a short period of time, thus these individuals should consult with an elder care attorney for some Medicaid planning techniques. Purchasing Exempt Assets pertain to items that are specifically exempt by Medicaid. Therefore, these items and expenses will not hold the Medicaid recipient or applicant accountable, as they do not play a role in Medicaid eligibility qualifications.
  • Asset Protection Trusts: An Asset Protection Trust is a great way to preserve your assets when applying for Medicaid, as it allows you to maintain your wealth while still receiving coverage. Many individuals fall into the assumption that the best way to remove the additional assets that prevent them from getting Medicaid coverage is to transfer the assets to family members. This approach, however, is extremely flawed and risky because it often results in a Medicaid penalty. Incurring a penalty prevents you from receiving coverage for a specified period of time. A trust allows you to disperse these assets to the family members you had in mind at the time of creating a trust. The beneficiaries will not be subject to the payment of capital gains tax based on the increase in quantitative value your assets have accrued over time. It is important to note that transfers to a trust are still subject to the Medicaid Lookback period,which tends to include the last five years of your assets. This strategy is extremely effective when it comes to maintaining your inheritance funds, while still receiving the Medicaid coverage you are in need of. 
  • Caregiver Agreement: A caregiver agreement is beneficial to individuals who transfer money to a caregiver for their services without deeming this asset as a gift. This option is great for individuals who would prefer to be cared for by a family member or a trusted close friend. You would not only be cared for by an individual you already know and have a close relationship with, but you would also be benefitting the caregiver for their service. The caregiver will be paid for their duty in caring for you and you will receive the best care possible. In most cases the caregiver would be paid for their services in advance under a contract that defines the services provided and the hours being worked. In the case that the patient passes away all of the unearned funds must be paid to Medicaid in correlation to the amount that Medicaid paid for the patient’s care. A Caregiver Agreement can be the best option for numerous individuals who do not wish to leave home and go into the care of a nursing home. However, there will be an income-tax consequence for the caregiver and there might be a loss of control of the money. 
  • Special Needs Trust: A d4A special needs trust is used for individuals under the age of 65 who wish to keep their inheritance while also maintaining Medicaid coverage. Those over the age of 65 will need a d4C special needs trust, also commonly referred to as the pooled special needs trust. A trustee will be responsible for managing the money and can only apply the money to the services and necessities not covered by Medicaid. Some of these expenses may include but are not limited to entertainment, travel, paying off debt, home improvements, and some other common acceptable expenses. 

An elder care attorney can assist you in selecting the best option for your personal circumstances. It is imperative that you are able to maintain your Medicaid coverage despite obtaining a recent inheritance. With a proper plan in place, your future will be set and established according to your preferences, Your best interests will be prioritized when selecting an option that would effectively correlate to your situation. If you have any further questions or interests regarding your Medicaid eligibility the Law Office of Inna Fershteyn is here to provide you with all of the answers and help you make all of the important decisions.

For further Medicaid eligibility information please contact the Law Office of Inna Fershteyn at 718-333-2395 to maintain your inheritance and receive Medicaid coverage.