Will insurance settlement impact medicaid?

amother

Wed, Nov 13 2019, 11:25 am

If someone legally qualifies for medicaid, and they receive a 1 time settlement for an injury that occurred several years ago, are they disqualified from getting medicaid if the settlement puts their income above the allowable amount?

amother

Slateblue

Thu, Nov 14 2019, 5:15 pm

amother [ OP ] wrote:

It is considered income and is taxable so it will impact medicaid or any other benefits you get based on income. I'm not an attorney but this is what my lawyer told me when I was considering a settlement.

amother

Chartreuse

Thu, Nov 14 2019, 5:25 pm

amother [ OP ] wrote:

This is definitely something that you should discuss with your attorney, including how and whether to attempt to structure the settlement to avoid such issues.

thunderstorm

Thu, Nov 14 2019, 5:43 pm

Yes. This was my mother’s concern when I filed a lawsuit and she had Medicaid at the time. In the end the settlement happened years later after I had a few kids already and it didn’t affect her at all. But it is considered an increase in income.

dankbar

Fri, Nov 15 2019, 1:59 am

If the settlement goes to the person who has Medicaid it will affect income, even more so, if it is not reported and person will continue to take Medicaid benefits, all money that Medicaid paid out to the person, (after the income) will need to be reimbursed to Medicaid with additional penalties & fees.

If someone else is the beneficiary of the money then it's different, let say if settlement is for a minor who lives in a household with benefits it might not affect family income if funds are not available to redeem, for minor, until 18 years of age.

Speak to lawyer & accountant. If sum is only let's say 25,000 it might not be taxable, if there are deductions on tax returns that might still offset the additional income. If it's a million it will make a difference.

There is also such a thing as paying only a little tax per year on part of the income & carrying over remainder of gain to the next years, as to only pay part of tax on gain, per year.

dankbar

Fri, Nov 15 2019, 2:03 am

What any govt benefit program can even do, is backtrack and ask reimbursements for all payouts on behalf of victim even prior to settlement, like a tease, "Now you have money, let us also get a slice of your pie!"

baby12x

Fri, Nov 15 2019, 2:10 am

dankbar wrote:

Even if its NOT taxable like a personal injury settlement it can still affect your eligibility for government aid. You have to report non-taxable income as well. Its 2 different things

dankbar

Fri, Nov 15 2019, 2:22 am

I don't think the money for settlement can go directly to a trust. I think once the person received the money in their account they might be able to set up a trust fund to avoid paying taxes it's like sort of money is on a boat in mid sea, the money doesn't belong anymore to the the elderly person but doesnt yet belong to the beneficiary of the gift/inheritence. It's basically a way to save on estate taxes because its technically not an inheritance but rather a gift in life, not after death.

baby12x

Fri, Nov 15 2019, 3:25 am

dankbar wrote:

And even if you manage to give it away or put in a trust you still have to report it. They have rules regarding settlements that are given away directly afterwards.

The best thing to do is to speak to a lawyer and figure out the best way to structure the settlement for your situation. Whether its a lump sum or an annuity that pays out monthly and how that affects your own specific circumstances