How Can I Protect My Accident Settlement and My SSI and Medicaid Benefits?

 In Special Needs Planning
personal injury settlement planning

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I am 60, disabled, and on SSI and medicaid. I was recently in a car accident, and am expecting a decent sized (about $60K) settlement. I do not want to lose my SSI and Medicaid benefits. What can I do to keep my benefits and to keep the settlement as well? Also, I owe about $50,000 to my parents. Can I give the settlement money to my parents in order to pay off the debt or will this still count as income thereby disqualifying me from further receiving my SSI and Medicaid benefits?


First, Medicaid may have a claim on your recovery to the extent it constitutes reimbursement for your medical expenses incurred as a result of the accident. Your personal injury attorney should settle any claim Medicaid may have.

Second, the funds are considered income during the month of receipt. The following month, if they are not spent down they are considered an asset. So, you should disburse the funds during the month of receipt and afterwards report the transactions to the Social Security Administration. You will owe back the Supplemental Security Income (“SSI”) for that one month, but that’s all.

Third, you could pay back your parents, but it could be problematic. Paying off a debt is a not a transfer of assets, but it’s a question of proof. You may need to present a promissory note or other evidence that your parents advanced you the funds as a loan and not simply parental support. Without such proof, the Social Security Administration could treat the repayment as a transfer of assets and penalize you with a lengthy period of ineligibility for SSI benefits.

Fourth, a safer route to go would be to transfer the funds to a (d)(4)(A) or (d)(4)(C) trust. The first is an individual trust for your benefit and the second is a pooled trust operated by a non-profit organization. (Here’s a directory of them.) Then the funds would be set aside for your benefit and not affect your SSI or Medicaid benefits except for that first month of receipt.

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