The Settlement Alliance

What is the Difference Between Entitlement and Needs-Based Benefits?

What is the Difference Between Entitlement and Needs-Based Benefits?

Aug 17, 2016

Many government benefit programs that provide monthly income or payments for medical services and/or medical equipment have strict eligibility limits. These types of benefits fall into one of two categories: entitlement benefits or needs-based benefits. The acceptance of a settlement could cause a reduction in needs-based benefits, or in some cases, the complete loss of eligibility. For many injured individuals, the loss of relied-upon monthly income can be catastrophic.

Here are examples of common entitlement and needs-based government benefits:

Entitlement Benefits

Certain types of benefits are considered “entitlement benefits”. Eligibility for these types of programs is not determined by income or asset tests, and as such, they should not be interrupted as a result of a settlement. They include:

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 received credits for their previous employment record.

Medicare: A federally administered 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. Individuals who receive SSDI benefits are eligible for Medicare after receiving SSDI benefits for 24 months.

Needs-Based Benefits

Many retired and disabled individuals who receive entitlement benefits also receive needs-based benefits. These types of programs do have income and/or asset tests, and could be interrupted as a result of a settlement. They include:

Supplemental Security Income (SSI): This is a federal supplemental income program designed to help disabled, blind, and aged individuals who have little or no income. This benefit provides cash to meet basic needs such as food, clothing, and shelter.

Medicaid: This program is administered by the states, but jointly funded by the federal government and the states. It provides medical coverage for low-income individuals and families. In many states, disabled individuals who qualify for SSI automatically become eligible for Medicaid.

Supplemental Nutrition Assistance Program (SNAP): This is a state program, formerly known as Food Stamps, that helps low-income individuals and families purchase food. Each state and/or county may have its own income and asset eligibility requirements for food assistance.

Temporary Assistance for Needy Families (TANF): This is a state program that provides temporary financial and medical assistance to families in need. Eligibility is based on family size and income.

Subsidized Housing: This program assists with the cost of housing and rent. It is often called HUD and/or Section 8 housing.

Children’s Health Insurance Program (CHIP): This program, administered by the states, provides medical coverage for children whose families’ incomes are too high to qualify for Medicaid, but too low to afford private healthcare coverage.

Work with a Professional

Before making any decisions about a settlement, it is important to contact the injured individual’s caseworker and/or local government benefit agency. Many benefits have regulations that are specific to a particular state. For more information about how a settlement can affect government benefits, contact The Settlement Alliance at 800-464-2500.

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

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