Article by Thomas D. Begley Jr.
Public benefits must always be considered in the settlement of a personal injury case. They are important for two reasons: (1) whether there is a lien to repay the public benefits, and (2) whether the plaintiff’s continued eligibility for public benefits depends on the establishment of a self-settled special needs trust. Common public benefits include the following:
Supplemental Security Income (SSI)
SSI is a monthly payment from the Social Security Administration to the SSI recipient. The maximum payment for an individual for 2014 is $721 per month.[1] For many people this is a significant benefit. Over a calendar year, it is $9,132. With inflation adjustments over a five-year period it might amount to $50,000. SSI is essentially a welfare program. It is “means-tested,” which means that there are income and asset tests to determine eligibility. SSI does not have a lien against a personal injury settlement, but a special needs trust is required to maintain the plaintiff’s eligibility.
Social Security Disability Income (SSDI)
The amount of the SSDI benefit, like Social Security Retirement, is based on the amount the worker paid into the system during his working career. This is known as a PIA. SSDI has no lien against the personal injury settlement and a special needs trust is not required to maintain eligibility.
Medicaid
Medicaid is a medical payment program. It provides very broad coverage. There are a number of variations on this program. One is straight Medicaid. If a person’s income is less than $972 per month, he or she is aged, blind or disabled, and has assets of less than $2,000, he or she is eligible for Medicaid. Another variation is New Jersey Family Care. This is an income-based program. There is no asset test. Medicaid has a lien against a personal injury settlement. A special needs trust is required to preserve eligibility for regular Medicaid, but not for New Jersey Family Care.
Affordable Care Act (ACA)
The ACA is funded with Medicaid dollars for individuals who have income less than 138% of the Federal Poverty Level. While it is unclear from the legislation and regulations and there has been no case law, it would appear that if an individual is receiving a Medicaid subsidy under the ACA, then there would be a lien against the personal injury settlement to the extent that Medicaid dollars were paid. There is no asset test for ACA insurance, but to the extent the assets produce income, it affects eligibility and premiums. Generally, a special needs trust would not be required.
Medicaid Waiver
There are a number of Medicaid Waiver Programs in New Jersey. Typically, these programs have an income cap of $2,163 per month for 2014 and an asset test of $2,000. Medicaid Waiver Programs typically provide home care and care in residential settings such as group homes, assisted living facilities, and nursing homes. Medicaid Waiver Programs have liens against personal injury settlements and special needs trusts are required in order to maintain eligibility.
Medicare
Medicare is essentially a medical insurance program. To be eligible, an individual must be over age 65 or disabled and receiving SSDI or Railroad Retirement Disability or suffer from End Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS). Coverage is very broad, but there are copayments, deductibles, and premiums. There is a Medicare lien against a personal injury settlement, but a special needs trust is not required to preserved eligibility.
Medicare Advantage
A Medicare Advantage Plan is essentially a Medicare HMO. Medicare Advantage Plans must provide all of the benefits covered by Medicare and they do offer additional coverage relating to deductibles and copayments. Clients often purchase Medicare Advantage Plans rather than stay with Traditional Medicare, so that a Medicare Supplement is not required. Medicare Advantage has a lien against personal injury settlements and a special needs trust is not required in order to maintain Medicare Advantage.
Supplemental Nutrition Assistance Program (SNAP) (formerly Food Stamps)
SNAP provides assistance to eligible individuals and families to assist in the purchase of food. There is an income test related to total household income. There is also an asset test. There is no lien against a personal injury settlement. A special needs trust is often required to maintain benefits.
Federally-Assisted Housing
Federally-Assisted Housing provides housing assistance, usually rental assistance, to low-income individuals and families. There is a Regional Income limit for purposes of determining eligibility and, if an individual or family is determined to be eligible, the individual typically pays 30% of his or the family’s actual adjusted gross income as rent. There is no lien against a personal injury settlement for federally-assisted housing. There is no asset test, but income from assets is considered income. A special needs trust is sometimes, but not always, required to maintain eligibility.
Temporary Assistance to Needy Families (TANF)
The TANF program in New Jersey is called WorkFirst NJ. The program provides temporary cash assistance and many other support services. The program known as General Assistance is part of the WorkFirst NJ program and provides benefits to families or individuals even if they do not have children. There is a lien against the personal injury settlement.
Therefore it is critical to obtain correct information from clients, so that liens can be satisfied, trusts can be established where necessary, and MSA accounts can be set up in appropriate cases.
[1] 78 Fed. Reg. 66413 (Nov. 5, 2013).
