Last week, the Senate unveiled its new version of the American Healthcare Act (AHCA). The proposed bill includes historically steep cuts to the Medicaid program. But did you know that there are already other circumstances under which an individual may lose Medicaid (Medi-Cal) eligibility—including the acceptance of a lump sum settlement?
Whether the AHCA is passed into law or not, here’s what you need to know about how a settlement could affect the benefits your clients receive:
AFFECTED: Needs-Based Benefits
Some may assume that the acceptance of a settlement precludes an individual from needing government assistance. In reality, the financial impact of an injury can be devastating, and even a multi-million dollar settlement can be eaten up quickly by the cost of medical equipment, medications, physical therapy, adaptable vehicles and home modifications, attendant care, and more.
Needs-based government benefits are programs that use income and/or asset tests to determine eligibility. In many states, assets as little as $2000 can render an individual ineligible for certain benefits. Here are the types of programs that could be affected by accepting a lump sum settlement:
Medicaid (Medi-Cal in California): A joint state and federal program that provides medical coverage for low-income individuals and families.
Supplemental Security Income (SSI): A federal program that provides cash to meet basic needs such as food, clothing, and shelter.
Supplemental Nutrition Assistance Program (SNAP): A state program (sometimes referred to as “food stamps”) that helps low-income individuals and families purchase food. Income and asset eligibility may vary by state and/or county.
Temporary Assistance for Needy Families (TANF): A state program that provides temporary financial and medical assistance to families in need. Eligibility is based on family size and income.
Subsidized Housing: Assists with the cost of housing and rent; sometimes referred to as HUD and/or Section 8 housing.
Children’s Health Insurance Program (CHIP): A state program that provides medical coverage for children whose families’ incomes are too high to qualify for Medicaid (Medi-Cal) but too low to afford private healthcare coverage.
NOT AFFECTED: Entitlement Benefits
Unlike needs-based benefits, entitlement benefits do not have income tests nor asset tests to determine eligibility. As a result, they should not be affected by the acceptance of a lump sum settlement. Here are some examples of entitlement benefits:
Social Security Disability Insurance (SSDI): Delivers Social Security benefits to the recipient based on two factors: 1) the number of years of employment during which the individual contributed to Social Security via FICA tax and 2) Social Security’s determination that the person is disabled.
Social Security Retirement Income: Provides Social Security retirement benefits for a United States taxpayer who was covered under Social Security and who received credits for their previous employment record.
Medicare: A federal health insurance program for people 65 years of age and older, some disabled people under the age of 65, and individuals who meet certain other criteria.
Contact us for Government Benefit Preservation Services
If you have clients who receive needs-based government benefits, make sure you’re working with the nation’s trusted experts in settlement planning. Traci Kaas works with injured claimants to create strategies that maximize settlement proceeds while preserving government benefit eligibility. To learn more, contact us today at 800-354-2258 or firstname.lastname@example.org.