Receiving a personal injury settlement after a car accident should bring relief. It’s the compensation you deserve—money to cover medical bills, lost wages, and the pain you’ve endured. But for many people who depend on Medicaid, Supplemental Security Income (SSI), or other needs-based government assistance, that well-earned payout can lead to an unexpected and devastating consequence: the loss of essential benefits.
These programs come with strict income and asset limits. Accepting a large lump-sum settlement—without the right legal guidance—can push you over those limits, causing your healthcare coverage to be revoked or your monthly SSI payments to be suspended. In some cases, people only find out months later, after missing crucial medical treatments or facing unexpected bills they can’t afford.
At Inkelaar Law, we’ve seen firsthand how devastating this can be for families already struggling after a serious accident. The good news? There are ways to structure your settlement so you don’t have to choose between the compensation you’re owed and the benefits you rely on to live. Whether that means setting up a special needs trust, using a structured settlement, or working with your attorney to spend down funds properly, the key is planning ahead—and doing it with the help of professionals who understand both injury law and government benefit systems.
In this guide, we’ll break down everything you need to know about how a car accident settlement can impact Medicaid, SSI, and other programs—and how to protect yourself. If you’re wondering “Will I lose Medicaid if I get a settlement?” or “How do I keep SSI after a personal injury case?”, this article is for you.
Let’s get started.
A personal injury settlement is financial compensation awarded to someone injured due to another’s negligence. Common cases include:
Settlements are typically paid by the at-fault party’s insurance company and may cover:
If you’ve been injured in a crash, working with experienced car crash lawyers near me or a vehicle accident lawyer ensures your rights—and benefits—are protected throughout the settlement process.
Medicaid
A state and federal program that provides health coverage for low-income individuals and families.
Eligibility is based on income level and need.
Often includes coverage for long-term care and nursing homes.
Children, pregnant women, seniors, and people with disabilities may qualify.
Medicare
A federal program that provides health coverage for individuals 65 and older or with certain disabilities.
Eligibility is based on age or specific health conditions, not income.
Includes Parts A (hospital), B (medical), C (Advantage), and D (prescription drugs).
Doesn’t typically cover long-term care.
Key Insight: Medicaid is means-tested, which means receiving a large personal injury settlement could immediately disqualify you. Medicare, on the other hand, generally remains unaffected by a financial windfall.
SSI (Supplemental Security Income)
Designed for low-income individuals who are aged, blind, or disabled.
Funded by general tax revenues, not Social Security taxes.
No work history required.
Recipients must meet strict income and asset limits.
SSDI (Social Security Disability Insurance)
For people who have worked and paid Social Security taxes.
Eligibility depends on your work history and disability status.
Provides monthly benefits based on prior earnings.
No income or asset limits, but work activity is restricted.
If you’re receiving SSI, it’s crucial to handle any personal injury settlement with care. Improperly managed funds could reduce or completely eliminate your monthly benefits.
Still unsure which program you’re enrolled in? A traffic accident attorney near me can review your situation and provide clarity.
Government programs like Medicaid and SSI impose income and asset thresholds to qualify:
Receiving even a modest lump-sum settlement can push you over these limits and disqualify you.
Risks Include:
To avoid these pitfalls, consult with accident car lawyers or a law firm for auto accidents who can guide you through protective legal steps, such as creating a trust.
Fortunately, it is possible to receive compensation without losing access to Medicaid or SSI—if you plan correctly. Consider these approaches:
A. Spend-Down Strategy
Use the settlement funds within the same calendar month on:
Caution: Any remaining funds not spent within the month may count as assets.
B. Establish a Special Needs Trust (SNT)
An SNT allows the settlement money to be set aside and used for supplemental expenses without affecting your eligibility.
C. Use a Pooled Trust
Managed by a nonprofit organization, this is a cost-effective alternative to an individual SNT.
D. Opt for a Structured Settlement
Instead of receiving a lump sum, you receive scheduled payments over time, which may help you stay under asset thresholds.
A qualified car wreck attorney near me or automobile accident injury attorney can help you evaluate which strategy is best.
Special Needs Trusts (SNT)
Structured Settlements
Working with a car crash law firm or attorney for car accident near me ensures these arrangements are compliant and effective.
Understanding how a personal injury settlement might affect your benefits is much easier when you see how it could play out in a real-life situation. The following hypothetical scenarios highlight common outcomes—both good and bad—that accident victims could face depending on how they manage their settlement.
Scenario 1: Settlement Causes Loss of Medicaid
An individual receives a large lump-sum settlement after a rear-end collision. Unaware of the impact on government benefits, they deposit the full amount into their personal checking account. Within weeks, their Medicaid benefits are suspended because their total assets now exceed the allowable limit.
The result? They lose access to crucial medical treatments and must go through a lengthy requalification process, during which they are left without health coverage.
Scenario 2: Benefits Protected with a Special Needs Trust
In a separate case, another person injured in a car accident receives a similar settlement amount. Before accepting the funds, they consult with a personal injury attorney who helps them establish a Special Needs Trust (SNT). By placing the settlement into the trust, the individual legally protects their Medicaid and SSI eligibility while still gaining access to the compensation for supplemental needs not covered by public assistance.
This approach allows the injured party to maintain consistent medical care and financial stability without penalties or benefit interruptions.
False. All funds count unless legally sheltered.
Incorrect. Medicaid is need-based; Medicare is not.
Not true. Knowledgeable personal injury lawyers work to protect your long-term health and financial stability.
Q: Can you qualify for both Medicaid and Medicare?
A: Yes. Some individuals qualify for both programs—this is known as “dual eligibility.” Typically, people who are low-income and over 65 or have certain disabilities may receive benefits from both programs. Medicaid may help cover costs that Medicare doesn’t, such as long-term care, copayments, or deductibles.
Q: Does Medicare cover long-term care or nursing home stays?
A: Generally, no. Medicare may cover short-term stays in a skilled nursing facility after a qualifying hospital stay, but it doesn’t cover long-term custodial care. Medicaid, on the other hand, may provide more extensive long-term care benefits for those who meet income and asset limits.
Q: What’s the main difference between SSI and SSDI?
A: The key difference lies in eligibility. SSI is a needs-based program for individuals with limited income and resources, regardless of work history. SSDI is based on your work credits and is for people who have paid into the Social Security system through their jobs.
Q: Can you receive both SSI and SSDI at the same time?
A: Yes, it is possible to receive both if you meet the eligibility criteria for each program. This is known as concurrent benefits. Your SSDI benefit must be low enough that you still qualify for SSI’s income limits.
Q: How do I apply for Medicaid, Medicare, SSI, or SSDI?
A:
Medicaid: Apply through your state’s Medicaid office or website.
Medicare: Sign up through the Social Security Administration (SSA) when you turn 65 or if you qualify early due to disability.
SSI and SSDI: Apply online at the SSA website or visit your local Social Security office.
Q: What if my SSI or SSDI application is denied?
A: Many first-time applications are denied. You have the right to appeal. It’s often helpful to consult with a qualified disability attorney who can assist you throughout the appeal process.
An experienced Tampa car crash lawyer near me or auto accident attorney in Tampa FL can:
Look for car accident lawyers in Tampa or personal injury lawyers attorneys who have handled similar cases with sensitivity and expertise.
Why Choose Inkelaar Law
At Inkelaar Law, we understand how confusing and stressful personal injury cases can be—especially when your benefits are at risk. Our team of attorneys for automobile accidents, motorcycle personal injury lawyers, and vehicle collision attorneys have decades of experience handling cases just like yours.
We’ve helped Florida residents recover compensation after:
What Sets Us Apart:
Searching for a lawyer for auto accident near me, a top rated car accident lawyer, or just need trusted car accident legal advice? Inkelaar Law is your partner every step of the way.
If you’re navigating a personal injury settlement while relying on SSI or Medicaid, don’t go it alone. The financial and health consequences of a mismanaged settlement can be severe—but they are avoidable with the right legal team.
Call Inkelaar Law today for a free consultation.
Whether you’re looking for a Florida car accident attorney, a lawyer for motor vehicle accident, or a Tampa FL personal injury attorney, we’re here to ensure your compensation doesn’t come at the cost of your future.
Disclaimer: The information contained in this article is for general educational purposes only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation. For specific legal advice, please consult with an attorney who is qualified to handle your case.
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