Benefit preservation
Keep the settlement.Keep the benefits.
A settlement can suspend Medicaid and SSI. We preserve eligibility with Special Needs Trusts, ABLE accounts, and structured income — planned before the funds ever arrive.
- Advanced designations
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Advanced designations
Top of the Table
PI experience
By legal duty
Served nationwide
The threat
A $2,000 line
between help and loss.
Medicaid and SSI are needs-based. A recipient generally cannot hold more than $2,000 in countable resources — a figure unchanged since 1989. A settlement received outright is counted as income in the month it arrives and as a resource the following month, so an unplanned award can quietly end the coverage a client depends on for care.
Medicare and SSDI are different. They are earned through work history and are not asset-tested, so a settlement does not change eligibility for them — though Medicare keeps a right to be reimbursed for injury-related care it has paid.
Needs-based — at risk
Medicaid & SSI
Gated by a $2,000 individual / $3,000 couple resource limit. A lump sum can suspend or terminate eligibility unless it is sheltered first.
Earned — not asset-tested
Medicare & SSDI
Based on work history, not assets. A settlement does not change eligibility; Medicare’s reimbursement right is handled on its own track.
The tools
Five ways to protect eligibility
The right instrument depends on the beneficiary’s age, the size of the recovery, and who can serve as trustee. Often the answer is a combination.
First-party (d)(4)(A) Special Needs Trust
Holds the beneficiary’s own settlement funds without counting against Medicaid or SSI. Authorized under 42 U.S.C. §1396p(d)(4), it requires the beneficiary be under 65 at establishment and repays Medicaid from what remains at death — the core tool for a larger recovery.
Pooled (d)(4)(C) trust
A trust established and managed by a nonprofit association, with a separate account for each beneficiary. There is no age limit to use one, which makes it well suited to smaller sums or a beneficiary who has no suitable individual trustee.
Third-party Special Needs Trust
Funded with someone else’s money — a parent’s or grandparent’s gift, inheritance, or life insurance — never the beneficiary’s own. Because no settlement funds flow through it, it carries no Medicaid payback, and the grantor names who receives the remainder.
ABLE account
A tax-advantaged account the beneficiary owns and controls. Up to $100,000 is disregarded for SSI, and it can pay for food and housing without reducing benefits — something a trust cannot do as cleanly. Best used alongside a trust for day-to-day spending.
Structured income, smoothed
A structured settlement paid directly into the trust — never to the individual — keeps periodic payments from counting as the beneficiary’s income, levels cash flow over a lifetime, and limits the fees and dissipation that erode an unplanned lump sum.
Choosing the structure
Matching the tool to the facts.
A quick, sourced comparison of the three Special Needs Trust structures and the ABLE account. The distinctions — age, payback, and who controls the money — decide the plan.
| Feature | First-party (d)(4)(A) | Pooled (d)(4)(C) | Third-party | ABLE account |
|---|---|---|---|---|
| Funding source | Beneficiary’s own settlement | Beneficiary’s own funds | Someone else’s funds | Beneficiary’s own funds |
| Age limit | Under 65 at establishment | None (funding at 65+ may trigger a penalty) | None | Disability onset before 46 |
| Who controls it | Chosen trustee | Nonprofit association | Chosen trustee | The beneficiary |
| Medicaid payback | Yes — mandatory | Yes, unless the nonprofit retains it | No | Applies (state policies vary) |
| Best use case | Larger recovery, beneficiary under 65 | Smaller sums, or no suitable trustee | Family money for estate planning | Day-to-day costs, food and housing |
Source: 42 U.S.C. §1396p(d)(4); SSA program rules. State law varies — figures and treatment change and should be confirmed for the client’s state at the time of planning. General information, not legal advice.
Why timing decides the outcome
Plan before the
funds arrive.
A settlement counts the moment it is constructively received — including funds in the attorney’s trust account or a court registry. The trust must be established and the settlement directed into it before the client takes possession. Address it early, and eligibility is protected; address it late, and the options narrow sharply.
- Screen every client for Medicaid and SSI at intake
- Bring in the planner before the settlement agreement is signed
- Direct settlement checks and structured payments to the trust, never the client
- Coordinate any Medicare Set-Aside inside the trust for dual-eligible clients
Common questions
Benefit preservation, answered.
The questions attorneys and families ask most about protecting Medicaid and SSI after a settlement. See more in our full FAQ.
Read the full FAQIt can. Medicaid and SSI are needs-based, with a countable-resource limit of $2,000 for an individual and $3,000 for a couple. A lump-sum settlement is treated as income in the month it is received and a countable resource after that, so without planning it can suspend or end eligibility.
Generally no. Medicare and SSDI are entitlement benefits earned through work history, not based on assets, so a settlement does not change eligibility for them. Medicare does retain a right to be reimbursed for injury-related care it has paid, which is handled separately.
A first-party, or (d)(4)(A), Special Needs Trust holds a beneficiary’s own settlement funds without counting against Medicaid or SSI. It is authorized under 42 U.S.C. §1396p(d)(4), requires the beneficiary be under 65 at establishment, and must repay Medicaid from what remains at death.
A pooled (d)(4)(C) trust is run by a nonprofit, has no age limit to use, and suits smaller sums or a beneficiary without a suitable trustee. An ABLE account is owned by the beneficiary; up to $100,000 is disregarded for SSI, and it can pay for food and housing, which a trust cannot do as cleanly.
A settlement counts the moment it is constructively received — including funds sitting in the attorney’s trust account or a court registry. The trust must be established and the settlement directed into it before the client takes possession, so the planning window is often days, not weeks.
Protect the recovery and the benefits.
Send us the case before disbursement — we’ll preserve eligibility and keep you in the loop.