Will My Personal Injury Settlement Affect My Medicaid Benefits?

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The short answer is yes, a personal injury settlement may affect your Medicaid benefits, as Medicaid is a needs-based program with strict income and asset limits. However, careful structuring and management of your settlement may help you protect your eligibility.

How Does Medicaid Affect Personal Injury Settlements?

Your Medicaid eligibility is determined by both your income and asset levels. If you obtain a personal injury settlement, that money is generally considered income and may affect your eligibility for Medicaid and other government benefit programs.

This can be a troubling turn of events for someone who was already struggling to pay the bills, especially if you suffered a personal injury and are waiting for your case to wind its way through the often-complex legal system.

A Financial Lifeline in Your Time of Need

One option that may help you out during this time is pre-settlement lawsuit funding, a means of obtaining a cash disbursement based on the strength of your legal claim. If your case is strong, you can obtain funding from a future settlement that can help you pay the bills and stay financially afloat. Generally, pre-settlement funding is not considered income and will not affect your Medicaid eligibility, although your future settlement or jury verdict likely will.

The more you know about how pre-settlement funding works, the better equipped you will be to make important decisions that affect your financial well-being in the short- and long term.

Other Options for Maintaining Medicaid Eligibility

A few options that may help you maintain eligibility for Medicaid even after receiving a personal injury settlement include:

  • A special needs trust: If your personal injury (or an unrelated injury or medical condition) has left you disabled, you may be able to put your personal injury settlement in a special needs trust, which will keep it outside of Medicaid income and asset consideration.
  • Spending down: If you spend the proceeds of your personal injury lawsuit, you will no longer have that money as an asset and therefore may maintain eligibility for Medicaid. Keep in mind that Medicaid has strict rules regarding the spending down of assets and you should proceed only with trustworthy legal advice and a careful plan.
  • Structured settlement: By structuring your settlement to be paid over time, your income may still fall below Medicaid eligibility thresholds.

How you maintain your eligibility and if pre-settlement funding plays a role depend upon the unique circumstances of your situation. You should proceed only with a full understanding of the pros and cons of a given decision.

Read our Ultimate Guide to Pre-Settlement Funding to learn more about eligibility requirements and other issues you may encounter as you make important decisions regarding your financial well-being.

Talk With a Professional Who Can Help

The pre-settlement funding experts at Mustang Funding deal with these complex issues every day and can provide you with guidance based on decades of industry experience. Contact us today to learn more about litigation funding and how it can help you overcome the financial burdens you face.

About Mustang Funding

Mustang Funding, founded in 2018 and based in Wayzata, MN, is a litigation finance company dedicated to empowering individuals and law firms nationwide with transparent and innovative financial solutions. With over $170 million funded, 10,000+ checks issued, and more than 3,000 cases financed, Mustang provides plaintiff pre-settlement funding, law firm financing, and commercial funding to meet diverse client needs. Their commitment to transparency, integrity, and expertise sets them apart, offering tailored financial support to plaintiffs, businesses, and legal professionals. By bridging capital gaps and fostering access to justice, Mustang Funding continues to lead the legal asset investment industry with a strategic, inclusive, and forward-thinking approach.

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