Medicaid and SSI Benefit Preservation

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Receiving a settlement could impact your Medicaid and Supplemental Security Income (SSI) benefits, but the extent of the impact depends on how the settlement is handled. Let’s break it down:

(Note: The following is based upon a Florida resident receiving a $50,000 settlement recovery.  Each state may have different rules that lead to different outcomes for the same situation. Please consult an expert to determine your needs in your state.)

SSI (Supplemental Security Income)

SSI is a needs-based program with strict income and resource limits. For 2025, the resource limit for an individual is $2,000. A $50,000 settlement would far exceed this limit if it’s considered a countable resource, potentially making you ineligible for SSI until the funds are reduced below $2,000. Additionally, if the settlement is paid as a lump sum, it may be treated as income in the month you receive it, which could reduce or eliminate your SSI payment for that month. After that initial month, any remaining funds would count as a resource.

Medicaid

In Florida, Medicaid eligibility for someone on SSI is typically tied to SSI eligibility. If your SSI is jeopardized due to the settlement, your Medicaid coverage could also be at risk. Even if you’re on a different Medicaid program (not tied to SSI), most Florida Medicaid programs have an asset limit of $2,000 for individuals, and a $50,000 settlement would exceed this, potentially disqualifying you unless steps are taken to protect it.

How to Protect Your Benefits

The good news is there are strategies to preserve your eligibility:

1. Special Needs Trust (SNT): You could place the settlement funds into a first-party Special Needs Trust. This trust is designed to hold your assets without counting them toward SSI or Medicaid resource limits. The funds can then be used for expenses that SSI and Medicaid don’t cover (e.g., certain medical costs, transportation, or personal items). The trust must be setup correctly, often with legal assistance, and include a provision that any remaining funds repay Medicaid upon your death up to the amount it paid for your care.
2. Spending Down: You could spend the settlement on exempt resources (e.g., a home, a car, or prepaid expenses like rent or medical bills) to bring your countable assets below $2,000. However, this must be done carefully and within the same month you receive the funds to avoid affecting SSI eligibility in the following month. Be cautious, as giving away money (e.g., to family) could trigger a penalty period for Medicaid.
3. ABLE Account: You could place up to $19,000 into a state-managed account if you meet the eligibility requirements outlined HERE.

Timing and Reporting

You’re required to report the settlement to the Social Security Administration (SSA) within 10 days of receiving it for SSI purposes. For Medicaid, you should also notify Florida’s Department of Children and Families (DCF) of the change in your financial situation. Failing to report could lead to overpayments or penalties.

Recommendation

A $50,000 settlement will likely jeopardize your SSI and Medicaid unless you take proactive steps. Consulting a company like Bua Settlements that is experienced in Florida Medicaid and SSI rules is crucial to set up a Special Needs Trust or explore other options tailored to your situation. Acting quickly—ideally before the settlement is received—can help ensure you keep your benefits while making the most of the funds.