Does a personal injury settlement affect eligibility?

Does a personal injury settlement affect eligibility?

Short answer: Yes. A settlement paid to the applicant is generally income in the month received and an asset after that. Special needs trusts and other planning can help in some cases.

Figures change periodically. Double-check current amounts before relying on them.

A personal injury, malpractice or similar settlement paid to a Medicaid applicant or recipient is generally treated as income in the month received and as a countable asset afterward. A large settlement can end eligibility until it is spent down.

Options to consider:

  • First-party special needs trust. For a person under 65 who is disabled, the settlement can be placed in a trust that does not count, with the state repaid from what remains at death.
  • Pooled trust. A nonprofit pooled trust is available to people with disabilities of any age in many states, although transfers by people 65 or older may cause a penalty in some states.
  • Allowed spend-down. Paying debts, home repairs, a vehicle, a funeral plan and medical needs.
  • Structured settlement payments are income as received.

Medicaid liens. If Medicaid paid for care related to the injury, the state generally has a right to be repaid from the settlement, within limits.

Report the settlement promptly. Planning before the settlement is finalized often protects the most.

Getting help

Every situation is different, and small facts can change the answer. If this question affects a real decision, especially with a spouse at home, a home, gifts or a trust, a Certified Medicaid Planner can apply your state’s rules to your situation. As a rough guide, published fees for help with an application range from about $500 to $6,000, and hourly help from about $150 to $600.

Last updated for 2026. General information only, not legal or financial advice. Medicaid Answers is a free educational resource published by Medicaid Answers Foundation.

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