Unfortunately, government liens against personal injury settlements have become commonplace. If you were receiving public assistance or government benefits and were awarded a personal injury award, you must notify any government lien holders of the award.
If you were receiving public assistance during the pendency of your personal injury claim, you could be required to repay any benefits you received. However, any claim against your award is only valid for the period of time your claim existed. You would not be required to repay any benefits that you received before your claim arose.
More importantly, a large personal injury settlement could jeopardize any cash assistance or benefits you are receiving. Fortunately, there are measures you can take to protect your assistance and your settlement award. The first step is to speak with our Philadelphia personal injury lawyers. At the Reiff Law Firm, our team of experienced attorneys is committed to protecting our clients’ rights. Call our law offices at (215) 709-6940 to schedule a free appointment.
Personal Injury Settlements and Public Assistance
Many people rely on assistance and benefits programs for monthly income and medical services. However, these programs often have strict financial eligibility requirements. Without careful planning, your personal injury settlement could result in a reduction of benefits or, in some cases, having your benefits suspended for a significant period or terminated.
Some benefit programs should not be affected by a personal injury award. For example, Social Security Disability Income (SSDI) is based on your work history. It is not a need-based program and your financial resources are factored into your eligibility. However, if your benefits are need-based, an award could affect them.
Supplemental Security Income (SSI) is a need-based program that provides monthly payments for the elderly, blind, or disabled. Your economic resources will impact your eligibility – including a personal injury settlement. Another program that could be negatively impacted is Medicaid. Medicaid is medical insurance the covers the disabled and those with limited financial resources.
Depending on your award, you could also lose your SNAP food assistance. Furthermore, if you reside in subsidized housing, a large windfall could negatively impact your eligibility.
When a cash assistance program looks at your financial resources to determine if you qualify for assistance, a lump sum payment could cause you to exceed the program’s resource and income limits. Even if you give your award as a gift or donate the proceeds, you could still lose certain benefits, such as Medicaid or SSI. In other cases, your might be required to reimburse the government for any cash assistance you received while your injury claim was pending. Our experienced Pennsylvania personal injury attorneys understand that certain cash assistance programs are necessary and will work closely with you if you are awarded a personal injury settlement.
Special Needs Trusts
One way to avoid losing your cash assistance or government benefits is to create a special needs trust. Instead of creating a will to bequeath your possessions to your loved ones, you would use your property to fund a special needs trust.
As part of the process, you would have to choose a person to serve as trustee. This individual will have complete discretion over the property in the trust, including spending it on your welfare. Because you will have no control or possession of the property in the trust, it will not factor into any eligibility requirements for need-based benefit programs. Typically, a trust will end when the funds are exhausted or when the beneficiary dies.
While you will not be able to be paid through the trust, the funds could be used to pay for necessities, including food, clothing, and housing. Typically, a special needs trust could be used to purchase non-countable resources, such as one vehicle, one residential home, furnishings, and burial and life insurance policies. However, the trust could not be used for investments, deposited into checking or saving accounts, to purchase vacation or investment properties, or fund an IRA. Our Allentown personal injury lawyers could help you draft a special needs trust that will be tailored to your circumstances.
Alternatives to Special Needs Trusts
There are other alternatives for when a special needs trust is not appropriate, such as when a personal injury settlement is relatively small.
Spend Down
In some situations, it might be possible to spend down your settlement before your eligibility for cash assistance is suspended. For example, you are permitted to pay legitimate debts that had accrued before the settlement was awarded. You are also allowed to purchase certain personal items, groceries, and supplies without impacting your eligibility. Money could be set aside for future funeral and burial arrangements. Our Bucks County personal injury lawyers will work with you through the spend down cycle.
Structured Settlements
Structured settlements are often coupled with special needs trusts. Structure payments are paid directly to the trust instead of the injured individual. However, in some situations, a structured settlement could be an alternative to special needs trust. For example, if you have a medical condition that is expected to improve or if you anticipate returning to the workforce, a structured payment could be delayed until it does not present an issue.
If You Have Questions Regarding Cash Assistance, Benefit Programs, and Personal Injury Settlements, Contact Our Pennsylvania Personal Injury Lawyers
A personal injury settlement could be a huge financial windfall after a tragic accident or catastrophic injury. However, many people worry about losing their cash assistance or Social Security benefits if it is their only income. Our Lancaster personal injury lawyers will help develop a plan to address your concerns and circumstances. Call (215) 709-6940 to arrange a free appointment with the Reiff Law Firm.
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