If I’m on Medicaid, Can They Take My Entire Settlement?

There are an estimated 300,000 to 500,000 personal injury cases every year. Some of these involve claimants who received Medicaid benefits, which makes things a little complicated.

In this article, we’ll discuss the subtleties of dealing with recovery payments and Medicaid liens.

Do I Have to Tell Medicaid?

Yes. Written notice of your personal injury claim is required by law if you received Medicaid benefits in your recovery. This is a condition of your participation on Medicaid. Failure to report your settlement could result in legal action against you.

Once you have obtained your settlement or award, you will need to notify Medicaid and begin discussions of how to satisfy any lien placed on you.

The Four Components of Medicaid Payback

There are four basic components to Medicaid’s repayment structure:

• Liens against the settlement;
• Special Needs Trust payback;
• Estate recovery; and
• ABLE account payback.

Let’s dive into each of these a bit further.

Liens

Medicaid will sometimes have a lien against compensation or awards paid out as the result of a personal injury settlement. There are, however, some considerations to keep in mind should you end up in this situation.

The first is a lien can only apply to injuries sustained from the case. This means that Medicaid cannot collect from personal injury settlements for unrelated injuries Additionally, a ruling by the Supreme Court held that liens could only apply to the portions of personal injury settlements that cover medical expenses. 

Special Needs Trust

Special Needs Trusts are applicable only in instances where the plaintiff was previously disabled. These accounts work to preserve benefits like SSI, Medicaid, SNAP, and other public resources.

Through these programs, people with disabilities maintain a fund for their disability care. This allows them to receive the care they need. Should they die, Medicaid can collect on all benefits received since the plaintiff’s birth.

This is a lifetime value and extends beyond the injuries in the settlement. In some instances, they can put a lien on property and other assets. A Special Needs Trust can make payments to help avoid this.

Estate Recovery

Estate recovery is only a risk in case of death. This only applies if there is not a surviving child under the age of 21, or who is blind or otherwise disabled permanently. The above specifics apply here as well.

ABLE Account Payback

These accounts are available only for individuals who receive disability before the age of 26. ABLE accounts are tax-free accounts to which funds can be saved for qualified expenses. On the death of a plaintiff, any funds left in the account must pay back Medicaid for services received after the establishment of the account.

How Much Can Medicaid Take?

The good news is that, in most cases, Medicaid is not able to take all of your recovery money. At the Federal level, they are only able to focus on money that was set aside for medical expenses. In addition, some states have percentage restrictions on what they are allowed to take.

The amount they take depends on the amount that was spent on your injuries. Medicaid will attempt to recover as much of the money as it possibly can. Lawyers are also usually able to negotiate a reduction in the amount paid back to Medicaid based on the amount due in legal fees. For example, if a third was spent on your representation, that third will not be taken from your payment.

Now What?

In any instance of personal injury, the first step is contacting legal representation. Hiring a dedicated legal professional like the lawyers at Power Trial Lawyers, P.C. is the best way to help ensure that you receive fair treatment.

Power Trial Lawyers is here to level the playing field and make sure that someone is advocating for you in your corner. Contact our office today and let us walk you through your options and what compensation might be available to you.  Call us anytime, day or night, at (844) 844-POWER and we’ll put your mind at ease knowing you’re not stuck sorting through these issues alone.