Receiving a personal injury settlement while on Medicaid does not automatically mean losing your benefits. However, Ohio Medicaid has strict rules regarding settlement funds. Understanding those rules in advance can keep both your settlement and benefits protected.
How does Medicaid decide who qualifies?
Medicaid is a need-based program. To qualify, your income and assets must stay below a set limit. In Ohio, a single individual can hold no more than $2,000 in countable assets. Countable assets include bank account balances, stocks, bonds, cash and most real estate beyond your primary home.
Monthly income must stay below the 138% federal poverty threshold. For elderly, blind or disabled individuals, Ohio applies the stricter Supplemental Security Income (SSI) income standard instead.
Why does a settlement put your Medicaid benefits at risk?
Ohio law requires Medicaid recipients to report financial changes within 10 days. A personal injury settlement qualifies as one of those changes. Once reported, Ohio Medicaid first treats the settlement as income for that month. Any remaining unspent funds then become a countable asset. This two-stage review is what makes personal injury settlements particularly risky for Medicaid recipients.
What happens when your settlement exceeds the limit?
When your assets go above the Medicaid limit, the state can suspend your coverage. That suspension lasts until your assets fall back below $2,000. Some people assume they can spend or give away the funds to get back under the limit. However, Ohio Medicaid reviews asset transfers made within the past 60 months. Giving away or selling assets below their actual value can cause a loss of coverage.
What are ways to protect your medicaid benefits?
Losing Medicaid coverage after receiving a settlement is not inevitable. Ohio law provides several options that can help you protect your benefits:
- Special Needs Trust (SNT): Assets placed in a properly structured SNT do not count toward Medicaid’s asset limits. This allows your settlement to support your needs without affecting your coverage
- Spending down on exempt assets: Allows use of excess funds on exempt assets such as home repairs or a vehicle, without triggering a loss of benefits
- ABLE accounts: Individuals who developed a qualifying disability before age 46 can save up to $100,000 without affecting Medicaid eligibility
Each of these options comes with specific legal requirements. The appropriate choice depends on the specific circumstances of your case.
Planning ahead to protect Medicaid benefits
Receiving a personal injury settlement can bring financial relief after an accident. However, it may also change your Medicaid eligibility. Since settlement funds can affect income and asset limits, it is important to understand their potential impact. With careful planning, you can preserve your access to essential healthcare while making the most of your settlement.