Navigating the aftermath of a personal injury can be overwhelming, especially when you’re unsure how seeking compensation might affect your future. If you’re relying on Medicaid to cover your healthcare needs, you might be hesitant to file a lawsuit, fearing that a personal injury settlement could jeopardize your eligibility for government benefits.
It’s a valid concern, and you’re not alone in wondering about the potential consequences. Talking with a knowledgeable personal injury attorney can help you understand your options, protect your Medicaid benefits, and ensure you receive the compensation you deserve for your injuries.
Don’t let uncertainty stand in the way of your recovery—reach out for the guidance you need to make informed choices. At Allen & Allen, we have a successful track record of securing personal injury settlements while navigating Medicaid coverage. We understand the need to protect your health insurance while pursuing a personal injury case.
What is Medicaid?
Medicaid is a form of health insurance. It is a joint federal-state program that offers health coverage to eligible low-income individuals. “Low-income” for Medicaid-eligibility purposes means that you own under a certain amount of assets and income, and it’s an amount that varies from year to year.[1]
So, what if you just received a check for your personal injury claim that tips you over that threshold? Thankfully, the Virginia Department of Social Services provides guidelines for those who otherwise meet all of the Medicaid non-financial and resource eligibility requirements, but whose countable income exceeds the medically needy income limit for their city or county.
Keeping Medicaid recipients qualified
According to Virginia law, an individual or family whose income and assets exceed the allowable limit will only qualify for Medicaid if they first do a Medicaid “spend down.” A Medicaid spend-down is a financial strategy used when the individual or family’s income is too high to qualify.
Some of that income must be spent down to ensure eligibility, often by paying for health care and medical-related costs. Some examples of healthcare costs that you might put toward a Medicaid spend-down include:
- Medical bills
- Prescription medication
- Transportation services to get medical care
- Home improvements such as wheelchair ramps or chair lifts
- Medical expenses such as eyeglasses, hearing aids, or other supplies
Keep in mind, however, that any medical expenses paid by Medicaid or insurance are not deducted from the spend-down liability.
Other exempt expenditures for Medicaid recipients
In addition to medical expenses, Virginia’s Department of Social Services provides additional exempt expenditures that can count towards your Medicaid spend-down. These include education expenses, personal hygiene expenses, paying off credit card debts, pre-paying burial arrangements, purchasing a home or paying a mortgage, or purchasing an automobile and associated registration and insurance.
In order to qualify for a spend down, you must promptly report all changes in income, resources, and living arrangements to your local Medicaid agency within ten days of receiving your personal injury proceeds. Failure to do so may constitute Medicaid fraud and could land you in hot water.
Countable assets
Resources will need to be evaluated to see if the individual or family’s countable resources are below the maximum resource limit for their household. If the individual or family’s countable resources are under the resource limit for their household, they are considered eligible for a spend down and will be sent a “Notice of Action,” which includes the spend-down liability limit amount, and the period of time covered by the spend down.
Countable assets and countable resources refer to the same concept in the context of Medicaid eligibility. Both terms describe the types of assets that are considered when determining whether an individual qualifies for Medicaid benefits.
Countable assets include:
- Cash and Cash Equivalents: Savings accounts, checking accounts, and cash on hand.
- Investments: Stocks, bonds, and mutual funds.
- Real Estate: Property that is not your primary residence.
- Personal Property: Valuable items such as jewelry, art, or antiques.
- Vehicles: Cars, boats, and other vehicles that are not essential for transportation.
Medicaid limits the amount of countable assets an individual can have to qualify for benefits. Some assets, such as a primary residence, personal items, and certain types of retirement accounts, might be excluded from this count. Consulting a legal expert can help clarify what is considered countable and how it might impact your eligibility.
This means that you may spend a specific amount of the settlement money on eligible purchases, medical services, and treatments within a certain time frame without forfeiting your income-based eligibility for Medicaid. The spend-down budget period may vary in length from one to six months.
In order to prove to the Department of Social Services that you spent the spend-down amount down below the threshold limit, you must save all of your receipts incurred, beginning from the day you received your personal injury proceeds through the end of the spend-down period. Tracking every dollar is critically important; whether it’s buying cold medicine or staying at the hospital overnight, every receipt adds up and could make the difference between whether you qualify for Medicaid going forward or not.
Can a personal injury settlement affect CHIP?
The Children’s Health Insurance Program (CHIP) is closely related to Medicaid. CHIP is a federal-state partnership program designed to provide health coverage to children in low-income families who do not qualify for Medicaid but cannot afford private coverage. It operates alongside Medicaid and often shares many of its rules and guidelines.
A personal injury settlement can potentially affect CHIP eligibility in the same way it might impact Medicaid eligibility.
Like Medicaid, CHIP has income and asset limits. A significant personal injury settlement could increase a family’s income or assets, which might affect their eligibility for CHIP. If the settlement results in an increase in household income, it could potentially push the family’s income above the CHIP eligibility thresholds.
To navigate these complexities, talk to a lawyer who can help you understand how a settlement might impact CHIP coverage and develop strategies to protect your benefits. The lawyers at Allen & Allen can assist with managing your personal injury claim while addressing concerns about health insurance programs like CHIP.
Managing personal injury claims while receiving Medicaid
A lawyer can provide valuable assistance in managing personal injury claims while keeping Medicaid eligibility in mind through several strategies:
- Legal Advice and Planning: An attorney can help you understand how an injury settlement or award might impact your Medicaid eligibility. They can provide advice on how to structure your claim and any financial settlements to avoid unintended consequences on government benefit programs.
- Settlement Structuring: A structured settlement can be a useful tool for a Medicaid beneficiary. It involves receiving your settlement or award in periodic payments rather than a lump sum. This approach can help you manage your finances in a way that may not impact your Medicaid eligibility as significantly as a large, one-time payment might.
- Special Needs Trusts: If you receive a lump-sum settlement, your lawyer might recommend setting up a Special Needs Trust. This type of trust can hold your settlement funds without affecting your eligibility for Medicaid or other government benefits. The funds in the trust are used to supplement your needs without replacing your Medicaid benefits.
- Financial and Estate Planning: Your lawyer can work with financial planners to create a strategy that preserves your Medicaid benefits while ensuring you get the financial support you need. This might include advising on how to manage your assets and income.
- Advocacy and Negotiation: Your attorney can negotiate with Medicaid to protect your interests and ensure that any settlement or award you receive is handled in a way that minimizes the risk to your benefits.
By employing these strategies, a lawyer can help you navigate the complexities of managing a personal injury claim while preserving your Medicaid eligibility. This allows you to focus on your recovery without worrying about how to afford health insurance for future medical expenses if you lose access to the Medicaid program.
Contact Allen & Allen to discuss a personal injury settlement with Medicaid coverage
If you’ve been injured and are concerned about how pursuing a personal injury claim might affect your Medicaid coverage, contact us at Allen & Allen. Our experienced attorneys understand the complexities of both personal injury law and Medicaid regulations.
We can file personal injury claims while protecting your healthcare coverage. Contact us today to discuss your case and discover how we can work together to secure the compensation you deserve without jeopardizing your Medicaid benefits. children’s health insurance program
Let us handle the legal details so you can focus on your recovery. Call Allen & Allen now for a free consultation and take the first step toward protecting your rights and your health care coverage. You can reach our Virginia office at 866-388-1307 or contact us online.
[1] In 2020, individuals qualify for Medicaid in Virginia if they have less than $851/month in income and own $2,000 or less in assets. For married spouses who both apply or if only one spouse applies, their combined income is limited to $1,150/month and $3,000 in assets.
