by Thomas D. Begley, Jr., CELA
Personal Injury attorneys must inquire as to whether their clients are receiving public benefits. Certain benefits are means-tested, so that if the client receives money directly those benefits are reduced or lost completely. This article will outline the common public benefits and indicate whether the receipt of a personal injury settlement will affect those benefits.
Supplemental Security Income
Supplement Security Income (SSI) is a means-tested federal program that provides income (a cash assistance grant) to certain aged (65 or over), blind, and persons with disabilities. The program is administered by the Social Security Administration. It is governed by federal statute, federal regulations, and the Program Operating Manual System of the Social Security Administration (POMS). For 2016, the maximum federal SSI benefit is $733 per month. In addition, the State of New Jersey has a supplement in the amount of $31.25 per month. If an individual has more than $2,000 of assets, he or she will lose SSI. Therefore, the receipt of a personal injury settlement will disqualify the plaintiff from SSI, unless the funds are placed in a Special Needs Trust.
Social Security Disability Income
This program is known as Old Age Survivors and Disability Insurance (OASDI). It is governed by the Social Security Act. Unlike SSI, which is a means-tested welfare program, Social Security Disability Income (SSDI) is an insurance program. Coverage is based on quarters of Social Security insurance coverage during the applicant’s employment. Receipt of a personal injury settlement will not affect the plaintiff’s SSDI.
Medicaid is a medical insurance program that benefits millions of Americans. There are many ways that individuals qualify for Medicaid. The vast majority of Medicaid recipients receive that benefit, because they are also receiving SSI. If they lose their SSI, they also lose their Medicaid. However, since the Affordable Care Act (ACA), millions of Americans now receive Medicaid regardless of whether or not they are disabled and regardless of whether they are receiving SSI.
For SSI-based Medicaid, there is an asset limit of $2,000. For ACA Medicaid, there is no resource limit. Therefore, receipt of a personal injury settlement by an SSI recipient will cause a loss of Medicaid. However, receipt of a personal injury settlement by a Medicaid recipient who obtained Medicaid through the ACA will not affect eligibility, except that the income from the settlement may push the income of the plaintiff above the income limits for eligibility under the ACA. The solution for an individual receiving SSI-linked Medicaid is a Special Needs Trust. However, under the ACA, only individuals with disabilities are qualified for a Special Needs Trust. Individuals receiving Medicaid under the ACA who are not disabled may not utilize a Special Needs Trust.
Medicaid Waiver Programs
Medicaid Waiver Programs are designed to provide Medicaid coverage for long-term care services. These services are typically delivered in the home or assisted living facilities. These services are vital to catastrophically-injured individuals. These programs have an asset maximum of $2,000. Receipt of a personal injury settlement would disqualify the plaintiff from Medicaid Waiver services, unless the funds are placed in a Special Needs Trust.
Medicare is a program that pays medical costs of eligible beneficiaries. Unlike Medicaid, which is a welfare program, Medicare is an insurance program. Receipt of a personal injury settlement will not affect Medicare eligibility.
Federally Assisted Housing
The federal government has two housing programs that provide assistance for low-income individuals and people with disabilities. These are known as Section 2.02 and Section 8. Section 8 is the program that has the most effect on personal injury plaintiffs. The Department of Housing and Urban Development (HUD) pays rental subsidies so eligible families can afford decent, safe and sanitary housing. Each section of the country has a maximum income limit for eligibility for public housing. If a tenant is eligible, they pay 30% of their net income for rent. While there is no asset test for federally assisted housing, if the assets produce income, the income may render the plaintiff ineligible or cause an increase in monthly rental. Income for the entire household is considered.
Payments from a Special Needs Trust are not counted as income, so long as the payments are irregular and sporadic.
Supplemental Nutritional Assistance Program
The Supplemental Nutritional Assistance Program (SNAP) is now the name for a program that used to be called Food Stamps. Recipients are provided an electronic benefit transfer (EBT) card that looks much like a credit card. SNAP eligibility is determined on the basis of household eligibility.
In New Jersey SNAP has complex resource and income limits. Therefore, receipt of a personal injury settlement could disqualify the individual from these benefits, unless the personal injury proceeds are placed in the Special Needs Trust.
Division of Developmental Disability
Many Division of Developmental Disability (DDD) programs are now based on Medicaid eligibility. The asset limit is $2,000. If the plaintiff is receiving or would otherwise be eligible to receive those benefits, then receipt of a personal injury settlement would disqualify them unless it has been placed into a Special Needs Trust. Other DDD benefits would be unaffected by receipt of a personal injury recovery.
In New Jersey most group homes are paid with Medicaid dollars. The asset limit is $2,000. Therefore, receipt of a personal injury settlement would disqualify the individual from those benefits, unless it is placed in a Special Needs Trust.
Many psychiatric institutions are paid for by Medicaid dollars under Medicaid Waiver Programs. Again, the asset limit is $2,000, so receipt of a personal injury settlement would disqualify the plaintiff unless the funds are placed in a Special Needs Trust.
 42 U.S.C. §1381 et seq.
 20 C.F.R. §416.
 42 U.S.C. §401 et seq. The Regulations are found at 20 C.F.R. §404.1 et seq.