Can Receiving a Settlement Jeopardize a Client’s Government Benefits?

One question personal injury attorneys often ask us as they’re settling cases is: “Can receiving a settlement jeopardize a client’s government benefits?

Often, that line of inquiry is followed by: “Which government benefits received by my client will be impacted by obtaining a legal settlement? Which types of government benefits will not be affected?

The simplest answer to all of these questions is: It depends on the type of government benefits that your client has. There are two general types of government benefits: needs-based government benefits and non-needs-based or entitlement government benefits.

Here’s what you need to know:

Needs-Based Benefits

The most common needs-based benefits are Medicaid and Supplemental Security Income (SSI). If your client receives Medicaid or SSI, your client needs to have a plan in place before receiving the settlement proceeds in order to maintain eligibility for those benefits. To put it simply, receiving a legal settlement can jeopardize a client’s needs-based government benefits.

Other needs-based benefits include:

  • Food stamps (SNAP)
  • Section 8 Housing
  • Temporary Assistance for Needy Families (TANF)
  • Veteran’s Pensions Benefits (often called Aid & Attendance benefits)
  • Low Income Home Energy Assistance Program (LIHEAP)
  • Children’s Health Insurance Program (CHIP)

The rules for each of the needs-based benefits listed above are unique — so make sure to contact a comprehensive settlement planner to ensure eligibility for these benefits is maintained (if possible).

Entitlement Benefits

The most common non-needs-based or entitlement-based government benefits that clients may be receiving are Medicare, Social Security Disability Insurance (SSDI), and most VA benefits. VA benefits can be a little tricky, but most of the time, they’re not going to be affected by a legal settlement. (Veteran’s Pensions is the major exception to this.)

When you’re getting ready to settle a case and you’re unsure about the impact receiving a settlement will have on your client and their household members, please give us a call. 

We’ll help your client and their household members come up with a plan to preserve government benefit eligibility. By doing some proactive planning, we’ll help your clients keep their benefits and find peace of mind — and we’ll make sure to protect you from failure-to-inform liability.

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