The Settlement Alliance

Will My Client's Settlement Affect Their Government Benefits Eligibility?

Will My Client's Settlement Affect Their Government Benefits Eligibility?

Sep 16, 2014

When a claimant receives a settlement in personal injury case, they have the option to receive the settlement recovery in the form of a lump sum, or via a structured settlement annuity. Prior to deciding whether to accept a lump sum or go another route, it should be noted whether or not the claimant receives (or expects to receive) government benefits. If your client receives means-tested government benefits, the acceptance of a lump sum could cost them their eligibility.

What are means-tested government benefits?
Means-tested government benefits are those that have income and/or asset limits. Once income and/or assets reach a certain level, beneficiaries risk losing their benefits eligibility. Income and asset restrictions for means-tested benefits can differ from state-to-state, so it is important to work with a professional who is well-versed in government benefits protection.

Here are some of the most common means-tested benefits:

  • Supplemental Security Income (SSI): SSI provides financial assistance for those who are elderly, blind, and/or disabled who have little or no other income. For 2014, the asset limit for an individual is $2,000 and the asset limit for a married couple is $3,000. Some states also offer a SSI supplement for those with needs not fully covered by federal SSI.
  • Medicaid: Medicaid provides medical coverage for low-income individuals and families. With the advent of the Affordable Care Act, there is no longer an asset test for certain individuals who apply for Medicaid. Instead, eligibility is determined using modified adjusted gross income; those with incomes under 133% of the poverty level are deemed eligible. However, those who apply for Medicaid through another program, such as SSI, and the elderly are still subject to an asset test.
  • Medicaid Waiver: Many states have state-specific Medicaid waiver programs. Most of these programs have income and asset caps, but each differs based on the state and the program.
  • Children’s Health Insurance Program (CHIP): CHIP provides medical assistance for low- and middle-class children up to age 19 whose families’ incomes are too high to qualify for Medicaid, but too low to afford private coverage. Additionally, some states have elected to include pregnant women of a certain income level in the eligibility standards. CHIP, like Medicaid, is administered by the states and jointly funded by the federal and state governments. The income eligibility standards vary widely from state to state, from under 200% to 400% of the federal poverty level.
  • Supplemental Nutrition Assistance Program (SNAP): SNAP, more commonly known as food stamps, provides an electronic benefit transfer (EBT) card to purchase food. Currently, income can’t exceed 130% of the federal poverty level. Assets requirements can vary state to state, but generally, households are subject to an asset limit of $2,000, or $3,250 if at least one person is 60 or older.
  • Federally-Assisted Housing (Section 8 housing): The Section 8 program provides subsidized rent to low-income individuals and families. While there is no asset test, the income limit varies from state to state.

If your client is involved in a settlement and is currently eligible for government benefits or expects to be in the future, an experienced settlement consultant can help determine the best way to protect those benefits.

We are proud to partner with the highest rated structured settlement providers in the industry:

  • American general Life Companies
  • Berkshire Hathaway Structured Settlements
  • Liberty Life Assurance Company of Boston
  • MetLife
  • Mutual of Omaha
  • New York Life
  • Pacific Life
  • Prudential