Do Trust Payments Affect Benefits

Programs such as Medicaid and Supplemental Security Income look at a person's income and assets. A large payment can push someone over those limits, which could pause or end coverage. This matters especially for patients who depend on Medicaid for nursing home care or home health services. Rules differ by program and by state, and some have look-back periods for transfers. Because the consequences can be serious, anyone receiving these benefits should get advice from someone who knows the rules before a payment is accepted or spent.

Medicare eligibility is generally based on age or disability and work history, not on income or savings, so a payment does not usually end Medicare coverage. Social Security retirement and Social Security Disability Insurance are also based on work history rather than assets. VA disability compensation is not means-tested. However, some VA programs, such as pension benefits, do consider income and net worth. Each program has its own rules, so confirm how your specific benefits work rather than assuming all government programs are treated the same.

Depending on the situation, planning options may include placing money in certain types of trusts, such as special needs trusts, or spending funds on permitted expenses in a way that follows program rules. These tools must be set up correctly to work, and some must be arranged before money is received. An elder law or benefits attorney can explain what is allowed in your state. Your injury attorney should also know about any means-tested benefits early, so the timing and handling of payments can be coordinated with that advice.

1. 1

   Make a list of every government benefit the patient or spouse currently receives.

2. 2

   Tell your attorney about any Medicaid, SSI or VA pension benefits before payments arrive.

3. 3

   Consult an elder law or benefits attorney about planning options in your state.

4. 4

   Avoid transferring or gifting money until you understand the program's rules on transfers.