Receiving a windfall like a personal injury settlement can be something that an older adult dreams of, until the fallout from the settlement starts. If you receive Medicaid benefits and rely on that for your health insurance and eligibility for other public assistance programs, getting a personal injury settlement could disqualify you from the Medicaid program.
A Florida estate planning attorney can help you navigate the situation by using existing legal strategies to protect your eligibility for Medicaid. Let’s talk about your options for receiving Medicaid benefits after a personal injury settlement.
Why You Could Lose Medicaid Eligibility if You Receive a Personal Injury Settlement Directly
Currently, there is a limit of $2,000 in countable assets for an individual to be eligible for Medicaid benefits. All of your countable assets cannot total one dollar more than $2,000. The Social Security Administration counts things like cash, stocks, bonds, and financial accounts toward the $2,000 limit.
Let’s say that you have $1,800 in countable assets before winning your personal injury case. Receiving a personal injury settlement of more than $200 will disqualify you for future Medicaid benefits. There are, however, things that you can do to make the personal injury settlement not get included in your countable assets.
A Special Needs Trust Can Protect Your Medicaid Eligibility
A special needs trust is a legal device that holds assets that can be used for necessary goods and services for a person with a disability. If the personal injury settlement proceeds get paid directly into the trust instead of to you, your settlement proceeds will not count toward your countable assets limit of $2,000.
Because a special needs trust is a powerful legal tool, there are many rules that get enforced strictly. These specialized trusts require sophisticated knowledge and experience. You will want to make sure that you have an estate planning attorney help you create the trust to comply with Florida and federal laws.
Things You Need to Know About Special Needs Trusts
Here are some of the highlights of special needs trusts:
- You have to be able to prove that you have a disability and need a special needs trust.
- You must show that the purpose of the special needs trust is to provide allowed benefits for the disabled individual.
- Only certain people are able to create special needs trusts that will meet the legal requirements.
- When setting up a special needs trust to preserve Medicaid eligibility, you must get your timing right.
- You will want to talk to an estate planning attorney before settling your personal injury case.
- Any money remaining in the special needs trust after you pass on will get paid back to the government to reimburse them for the amount of public assistance you receive during your lifetime.
- You will want to choose the trustee of your special needs trust carefully. Make sure the trustee learns the rules involved that apply to Medicaid eligibility and special needs trusts. If the trustee uses the special needs trust for an expense that is not allowed, the special needs trust could become invalidated, and you could lose your Medicaid eligibility.
Florida estate planning attorneys can answer your questions about special needs trust and Medicaid eligibility. Get in touch with our office today, we offer a free consultation.