Yes, although Medicaid will have a lien against your personal injury settlement, a lawsuit is still well worth it if you have Medicaid and/or Medicare!
This article will give you some information you need to know about Medicaid liens in personal injury cases and your personal injury settlement when you’re receiving any public benefits like Medicaid, SNAP (food stamps), Section 8 Housing, or SSI.
Note: If you don’t have a personal injury lawyer yet or haven’t settled your personal injury case, please call us for a free consultation. If your personal injury case is settled, it is too late for us to help you, but you should keep reading below.
Will Medicaid Have a Lien On My Personal Injury Case?
If you receive Medicaid and/or Medicare, there will be a lien on your personal injury settlement money. But that’s not really a problem because:
- When Medicaid and Medicare have a lien on your personal injury settlement for money paid for medical treatment, you are entitled to be reimbursed by the defendant for that money.
- Both Medicaid and Medicare liens can be substantially reduced.
Additionally, your public benefits such as Medicaid, SNAP (food stamps), Section 8 housing, and SSI can be protected by depositing your personal injury settlement money in a trust from which you can spend your money.
Will a Personal Injury Settlement Affect My Food Stamps (SNAP)?
Your personal injury lawyer can either deposit your personal injury settlement money in a trust from which you can spend your money, or you can choose to discontinue your SNAP or food stamp benefits. If your personal injury settlement is a lot of money, you can discontinue your SNAP or food stamp benefits, but the choice is yours.
Will a Personal Injury Settlement Affect Section 8 Housing?
Your personal injury lawyer can either deposit your personal injury settlement money in a trust from which you can spend your money, or you can choose to discontinue receiving Section 8 Housing.
If your personal injury settlement is a lot of money, you can discontinue receiving Section 8 Housing, but the choice is yours. We had several clients who used their personal injury settlement money to buy a house or apartment.
What Can I Do If My Personal Injury Case Already Settled, and I’m on Medicaid?
If your personal injury case was settled and you deposited your settlement check in your account
- You’re probably out of luck and will lose your Medicaid and other public assistance benefits.
- Unfortunately, we cannot help you.
If your personal injury case was settled and you gave your settlement check or settlement money to someone
- You’re probably out of luck and will lose your Medicaid and other public assistance benefits.
- Unfortunately, we cannot help you.
If your personal injury case was settled and you received your settlement check but didn’t deposit it
- Do NOT deposit your settlement check if you want to keep your Medicaid and other public assistance benefits.
- Call your personal injury lawyer and tell your lawyer to put your settlement money in a Special Needs Trust or a Pooled Trust because you want to keep your Medicaid and other public assistance benefits.
- Discuss with your personal injury lawyer which trust is better for you. Unfortunately, we are not allowed to help you because you are represented by another lawyer.
What Can I Do If My Personal Injury Case Has Not Settled, and I am on Medicaid?
If your case is not settled, you want to change your lawyer, and you want us to be your new personal injury lawyer – please call us for a free consultation.
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Medicaid Liens and Medicare Liens on Your Personal Injury Settlement
What Can Medicaid Lien Against My Personal Injury Settlement?
If you’re on Medicaid and/or Medicare, there may be a lien against your case. But the lien is only for money Medicaid and/or Medicare paid for the medical treatment of the injury caused by your accident.
Medicaid and/or Medicare cannot put a lien on your case for medical treatment not related to your accident.
How Much Can Medicaid Lien Against My Personal Injury Settlement?
The lien is almost always much less than the amount billed because it is paid at very low Medicaid rates and can then be reduced by 1/3.
Most of our clients’ Medicaid and Medicare liens were only a fraction of the amount we obtained for them. Many of the liens were only a few hundred dollars. In some cases, the liens were reduced to $0.
Many personal injury lawyers will pay the full amount of the liens in full, but we do not. We use a company that reviews the billing to eliminate all unrelated medical charges, and they have lawyers who negotiate to reduce the liens.
Since the lien is usually very small as compared to your personal injury settlement, it is well worthwhile to pursue a claim for injuries if you have Medicaid and/or Medicare.
How Can I Keep My Personal Injury Settlement If I’m on Medicaid?
A different question is, how to settle your injury case for $500,000 when you’re on Medicaid? Medicaid doesn’t allow you to have more than $15,900 in nonexempt assets in 2021.
If you settle your accident case for more than Medicaid allows you to have, there are several options allowing you to receive the money.
Option 1 — Put Your Personal Injury Settlement Money In a Trust
One option, for people under age 65, is to have the money paid to a Special Needs Trust, which will protect your settlement money without interrupting your Medicaid benefits.
If you are over the age of 65, you cannot put the money into a Special Needs Trust, but you can put the money into a Pooled Trust.
Note: Your Personal Injury Lawyer must put your settlement money in the trust. You CAN NOT do it yourself.
Special Needs Trusts and Pooled Trusts are recognized by the government and allow you to receive your settlement money without disqualifying you for Medicaid.
This handbook tells a trustee how to administer a Special Needs Trust and this guide from the New York City Dept. of Social Services TRUSTEE GUIDELINES FOR ADMINISTRATION OF A SUPPLEMENTAL NEEDS TRUST
How Much Does It Cost to Set Up a Trust?
A Special Needs Trust costs approximately $2,500 – $4,000 to set up. The cost to set up a Pooled Trust is usually around $250 – $500.
What Can I Buy With My Trust Money?
With a Special Needs Trust, you can buy almost anything you want by paying for it directly from the trust. You can use your trust money to pay for things like:
- Car (up to $30,000)
- Purchase of a house or apartment (not rent if you receive SSI or live in Section 8 housing, or you can choose not to receive those benefits)
- Dental treatment not covered by Medicaid
- Medical treatment not covered by Medicaid, such as elective plastic surgery
- Medical equipment not covered by Medicaid
See a list of things you can buy with a Special Needs Trust.
What Can’t I Buy With My Trust Money?
You can’t use trust money to pay for any medical treatment that Medicaid would pay for, but you can pay for dental or medical treatment not covered by Medicaid, such as elective plastic surgery, and you can pay for medical equipment that Medicaid will not pay for.
You can’t use trust money to pay for anything that any public benefits would pay for. For instance, if you receive SSI or live in Section 8 housing, you cannot use your trust money to pay for housing.
See a list of things you cannot buy with a Special Needs Trust.
How Can I Spend My Personal Injury Settlement Money From a Trust?
How You Can Buy Things and Spend Money With a Special Needs Trust
If your money is in a Special Needs Trust, you will name a trustee to manage the trust and file a tax return for the trust. The trustee can be someone you know, or you can get a professional trustee. A bank may have a professional trustee.
Your Special Needs Trust can have a credit card or debit card, which you can use to make purchases. The credit card statements will be paid by your Special Needs Trust. Your Special Needs Trust can also have checks that you can use to pay for things.
How You Can Buy Things and Spend Money With a Pooled Trust
You do not need to manage Pooled Trust or file a tax return because a Pooled Trust is managed by a professional trustee.
To spend your money from a Pooled Trust, you can use a credit card. You cannot use a debit card or checks. You will send the credit card statement to the trustee, who will pay the amount due for the purchase on the credit card.
You can send an invoice to the trustee to pay for an item, or you can send a paid receipt to the trustee.
Note: When you have a Pooled Trust, no matter how you pay for something, the trustee will only pay for allowed items and services.
Can I Break The Trust If I Want My Personal Injury Settlement Money Out of The Trust?
Probably not. There are rare exceptions when you can take the money out of the trust.
Option 2 — Get Off Medicaid and Purchase Health Insurance
If the settlement is large enough, you can decide to get off Medicaid and purchase health insurance. The cost of buying health insurance is probably around $1,000 or more per month.
When your trust money runs out, you can reapply for Medicaid.
Option 3 — Get Off Medicaid and Get a Job With Health Insurance Benefits
The best option is to get a job with health insurance benefits.
Costco is a great employer that pays well and gives a pension with health insurance, eye care, and dental to full-time AND part-time employees.
Option 4 — Get Health Insurance From Your Spouse
If your spouse has a job or can get a job that gives health insurance with family coverage, you can get off Medicaid and get health insurance from your spouse’s plan.
Option 5 — Spend Your Personal Injury Settlement Money
You can spend the money in the month you receive it and lose your benefits for a month.
Will My Personal Injury Settlement Affect My Medicare Benefits?
If you’re on Medicare, your personal injury settlement money can be deposited in your bank account and does not have to be deposited in a trust.
However, in some cases where you will need Medicare to pay for future medical treatment of the injury sustained in the accident for which you got the settlement money, you will need to have a Medicare Set Aside account. If you do, proper planning will protect your Medicare benefits and minimize the amount you need to deposit in a Medicare Set Aside account.
A Medicare Set Aside account is an account in which you deposit a portion of your settlement to pay all future medical expenses related to the injury that Medicare would have to pay for. The future medical expenses must be for the same injury as the injury claimed in your lawsuit because of your accident.
Example: You broke your ankle in an accident and receive a personal injury settlement of $1,000,000. At the time of your settlement, your doctor says you will not need future medical treatment for your ankle. You will not need a Medicare Set Aside account.
- After your settlement, you go to your doctor for back pain or injury – Medicare will pay for the medical treatment even though you didn’t have a Medicare Set Aside account.
- A long time after your settlement, you go to your doctor for treatment relating to your ankle injury. Medicare should pay for the medical treatment even though you didn’t have a Medicare Set Aside account because it was not anticipated that you would have a future problem with your ankle.
What is a Medicare Set Aside?
I Settled My Case, But Medicaid Never Got The Payment!
Susan asked the following question via Chat while she was on this page, “My husband got a settlement for 80,000. He had surgery the lawyer took 11,500 to pay Medicade [Medicaid] they never got the payment. I just wanted to know how to get the money back from this lawyer.”
I called Susan, and she told me her case was settled in 2019 by a personal injury lawyer in the Bronx. Medicaid said they last heard from her lawyer in 2018, and the Medicaid lien still has not been paid.
Susan also said the lawyer doesn’t answer the phone. I thought that was strange, so I called the lawyer, and no one answered the phone even though the law firm has three lawyers in the partnership name.
Answer: I told Susan to fax a letter to the lawyer asking what happened with the Medicaid lien and the money being held in escrow for the Medicaid lien. I also told her that if she didn’t receive a response to file a complaint with the Bronx County Bar Association and that she could call me back if she still had any questions.
Phil Franckel is well-known in New York and has been a personal injury lawyer since 1989. He is a Founding Partner of 1-800-HURT-911, LLP®, the Personal Injury Dream Team™, and a former Member Board of Directors of the New York State Trial Lawyers Association. He has an Avvo Top 10 Rating, Avvo Client’s Choice Award with all 5-star reviews, Avvo Top Contributor Award, Multi-Million Dollar Trial Lawyers Award, and others. See Mr. Franckel’s bio for areas of expertise.
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Philip L. Franckel, Esq. is one of the HURT911® Dream Team™ Founding Partners at 1-800-HURT-911® New York; He has a 10 Avvo rating; Avvo Client’s Choice with all 5-star reviews; Avvo Top Contributor; and a former Member of the Board of Directors of the New York State Trial Lawyers Association.
Robert Plevy, Esq. is one of the HURT911® Dream Team™ Founding Partners at 1-800-HURT-911® New York. Rob began his legal career in 1993 as an Assistant Corporation Counsel defending The City of New York against personal injury lawsuits.
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