Understanding Medicaid’s Transfer Penalty

If your client has received a settlement from their personal injury case, will they lose their Medicaid eligibility? Even some of the most seasoned attorneys are unaware of how easily this can occur. In order to prevent this from occurring, you can protect your client’s Medicaid eligibility through a pooled trust for Medicaid purposes.

Medicaid’s Strict Requirements

The income and asset limits for Medicaid eligibility are both low, so a settlement in a personal injury case is more than likely going to put your client’s eligibility at risk.

For the state of Florida, an individual’s income must be $2,250 or less per month, and they must have less than $2,000 in assets. This $2,000 allows for a few exclusions such as a separate funeral fund; however, it is a low enough number that the majority of personal injury settlements would have the potential to disqualify your client from their Medicaid benefits.

What Happens If My Client Gives Their Settlement Away?

Many people immediately think, “If I give my settlement to my kids, my assets will drop and I will qualify for Medicaid again.” However, this is inaccurate.

Medicaid protects its interests by making sure that parents don’t just gift their assets to the children who would eventually inherit their estate anyway. Your client is in danger of transfer penalties if they give away their settlement. In fact, Medicaid’s look-back rule and transfer penalty go back before an individual applies for Medicaid. Under new rules, all gifts and other transfers made up to five years before applying are treated as if they happened on the day the application was filed. This rule prevents people from giving their children their inheritance on a Monday and filing for Medicaid on a Tuesday, so to speak.

Pooled Trust for Medicaid Purposes

Winning a personal injury case is a satisfying feeling, but if the settlement costs your client their long-term access to health insurance, no one wins. Your client is put into a situation that negatively impacts their financial and physical health, and they could consequently sue you for malpractice.

This is where a pooled trust comes into play. A pooled trust is managed by a non-profit organization, rather than your client, so he or she remains eligible for Medicaid.

Are you prepared to navigate the nuances of setting up a pooled trust?

Many trial lawyers prefer spending their time and energy doing what they do best; consequently, they entrust Synergy Settlement Solutions with the rest. The experts at Synergy know how to set up a pooled trust for Medicaid purposes in a way that best protects your client’s Medicaid eligibility and also protects you from liability.

For more information or to schedule a consultation, please submit our contact request form.

Disclaimer: The information contained in this article is for general educational information 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.

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