If you are on Medicaid in Washington, DC, you should be aware of how a personal injury settlement affects Medicaid benefits. The purpose of Medicaid is to provide healthcare coverage to lower-income individuals. The program aims to ensure eligible individuals access necessary healthcare, including doctor visits, hospital stays, long-term medical care, and preventive services. This is critical because of how expensive healthcare coverage can be. Note also that Medicaid is distinct from Medicare, which is for older individuals. Without Medicaid, many would be untreated when they suffer serious injuries or illnesses. However, not just anyone can qualify for Medicaid in Washington, DC. And that is for good reason. While Medicaid is a tremendous benefit for the roughly 285,000 enrolled in DC, it does cost the District some of its budget. So, you must qualify to receive Medicaid benefits.
This number means about 40% of the 702,250 DC residents are on Medicaid or CHIP. Medicaid and the Children’s Health Insurance Program (CHIP) provide health and long-term care coverage to almost 82 million low-income children, pregnant women, adults, seniors, and people with disabilities in the United States. Clearly, the program’s benefits serve many families well. However, many families encounter an issue: By earning just a slight increase in income, they lose benefits and may find themselves in a worse position. Thus, understanding how a personal injury settlement affects Medicaid benefits is critical. An experienced personal injury attorney at Gelb & Gelb can break down the precise implications you will face after a settlement should you wish to keep your benefits.
This guide explores how a personal injury settlement affects Medicaid, how to protect your benefits, and why working with an attorney is essential in managing your settlement and eligibility.
Medicaid and Financial Eligibility
First, who can qualify for Medicaid? Your age, race, or gender do not matter when determining whether you qualify for Medicaid benefits in DC. Note that this is different from other states where your age is taken into consideration. Whether you qualify also depends on whether you have dependent children, your age in relation to your income, or other factors such as if you are disabled, pregnant, or your immigration status. To be eligible, you must be a DC resident. The maximum income requirements vary significantly depending on your cost of living.
If you are a single adult with no children, you may earn up to $2,698.25 per month or $32,379 annually. As an adult between 19 and 20, you may earn up to $2,773.55 monthly ($33,282.60 annually) and qualify for DC Medicaid. If you are a parent or caretaker of dependent children, your maximum salary may be more.
There are exceptions to these rules. For example, a pregnant woman may be eligible for Medicaid regardless of income. The same is true for disabled individuals. Moreover, if you are a member of a federally recognized tribe or have a certain citizenship or immigration status, you may be eligible for DC Medicaid despite an income that surpasses the limit.
What is Spend Down?
If you are ineligible for Medicaid benefits because of your income, you may fit into the exception under Spend Down. This part of the program is for individuals with incomes over the Medicaid limit but who also have high medical bills they are responsible for paying. However, you are unlikely to qualify for Spend Down if you are an adult without dependent children. If you become eligible through Spend Down, you will be responsible for paying some of your bills, and Medicaid will cover the rest during your Spend Down eligibility period that you are eligible as long as the bills are for Medicaid-covered services. However, this rarely applies in a personal injury context. Medicaid eligibility under Spend Down is a one-month budget period. Although, there are limited exceptions that may carry you into a six-month budget period.
Additionally, there are some rules you should note:
- First, you can only use the medical expenses for which you are responsible. In other words, if you already use Medicare or some other insurance, you do not qualify for Spend Down.
- Second, you can use an older medical bill so long as you still owe money on that bill.
- Even if you have paid a current medical expense, you can still use that bill to qualify so long as it is current.
It is best to speak to a member of the DC Medicaid office for the most up-to-date information on the current Spend Down bill requirements, as they may vary.
What is Emergency Medicaid?
Emergency Medicaid may sound like Sepnd Down Medicaid, but it serves a different purpose. Emergency Medicaid provides medical coverage to uninsured individuals who do not qualify for Medicaid due to citizenship/immigration status. However, a doctor must first assert that the patient is in an emergency condition to qualify for Emergency Medicaid. The loose definition of being in an emergency medical condition is that a failure to receive treatment could put the patient’s health in serious danger. This may include serious jeopardy to a patient’s health, impairment of bodily functions, or dysfunction of a bodily organ.
- Are A District Resident;
- Have an emergency medical condition that a health provider must verify;
- Meet income requirements; and
- Not eligible for ongoing Medicaid due to citizenship/immigration status
How a Personal Injury Settlement Affects Medicaid Benefits
A settlement can have an important impact on your Medicaid benefits, which you should be aware of. The law is clear. As of 2024, you are ineligible for benefits if you have over $4,000 in assets as a single individual or $6,000 as a married couple. Of course, there may be exceptions, and it is best to contact an attorney to see whether you qualify for an exception. However, as personal injury lawyers who have practiced in Washington, DC, for over 70 years, we have spoken to the DC Medicaid office countless times. Unfortunately, there is a risk of getting too much money from a settlement or personal injury judgment. Let’s suppose your case settles for $30,000.
First, understand that we must pay back any lien from DC Medicaid. The law requires that we communicate with them and reimburse them out of any recovery. If there is no recovery, there may not be a need for reimbursement.
However, if there is a recovery, you must be cautious of accepting a large sum. If you collect $18,000 from the $30,000 recovery after legal fees and medical expenses, you may exceed the Medicaid asset limits and lose your right to Medicaid benefits. While you may decide this is worthwhile, it may not be if it means losing your home and any consistent medical care. This is particularly true if you rely on that medical care for your health. Accordingly, we advise clients to consider the ramifications of accepting the higher amount. Of course, accepting a settlement offer for the maximum amount that places you above the asset limit does not necessarily exempt you from Medicaid benefits. Instead, we would simply pay back more to DC Medicaid.
Medicaid Lien Recovery
Medicaid is legally entitled to recover the costs paid for your medical treatment related to the injury through lien recovery. This process requires your personal injury attorney to pay back DC Medicaid the amount they demand. Of course, there is some room for negotiating. However, we lack much leverage in this negotiation as it is based on a formula, and we are legally obligated to oblige regardless. What entitles Medicaid to place a lien on your recovery? DC Medicaid is paying your medical expenses. It is highly likely that they are paying more for your medical expenses than they will get back through a lien. The amount they demand also correlates with your medical expenses and not your lost wages, pain and suffering, or punitive damages when applicable. Understanding how much of your settlement Medicaid may recover is crucial.
If you do not account for a Medicaid lien, you may miscalculate how much you will keep from the recovery. Additionally, while some clients would prefer that their personal injury attorney give the full recovery directly to the client and allow the client to pay back Medicaid as they see fit, this is not possible. A failure to comply with federal law mandating that the attorney pay back Medicaid would be an ethical and legal violation and could result in serious penalties.
Structured Settlements as a Solution
This is a solution that some claimants come up with as a means of avoiding the asset limit. The logic is that a claimant on Medicaid can spend enough money each month to avoid exceeding the threshold of $4,000 or $6,000, depending on marital status. However, purposely structuring a settlement to avoid losing Medicaid benefits may be fraudulent. You should speak to an attorney for advice on handling this scenario. If the insurance company offers a structured settlement or that is the only way to make a recovery, then there is no fraudulent intent, and you may be able to use this recovery method.
Why You Need Legal Guidance
You need legal guidance throughout the recovery process for several reasons if you receive Medicaid benefits. The first reason is to ensure full compensation. There are several things to consider when evaluating the value of your case. Not only must we consider liability but also the value of your damages, whether there is a sufficient source of recovery, and whether you will lose your Medicaid benefits. Maximizing this amount to get the most money into your pocket can be tricky. Fortunately, our team of attorneys has been practicing in Washington, DC, for over 70 years. We understand the ins and outs of the Medicaid process and know how to value your case for maximum outcome.
Second, you need legal guidance in this context to understand and handle Medicaid lien recovery. This is a complex process. There are times when it makes sense to request a lien reduction, and there are times when you may even want to pay Medicaid back more for the reasons discussed above. Ultimately, without legal assistance, many individuals are unaware of their right to negotiate the lien or how to do so, resulting in a much smaller final settlement amount.
Third, avoiding costly mistakes can be hard for a layperson who has never been through the car accident process. Whether you are hurt in a car accident, truck accident, slip and fall, or any number of other possibilities, navigating the personal injury process while on Medicaid is difficult. If you accept a lump sum settlement without considering its effect on your Medicaid status, you could be ineligible for the program and forced to pay for all medical expenses out of pocket. Of course, options are available to get out of this hole quicker, such as Spending Down. Doing this may requalify you for Medicaid benefits.
Frequently Asked Questions
Below, we consider frequently asked questions regarding how a personal injury settlement affects Medicaid.
Will a Personal Injury Settlement Automatically Disqualify Me From Medicaid?
A personal injury settlement can affect your Medicaid. However, a personal injury case will not automatically disqualify you from Medicaid in Washington, DC. It depends on the size of your recovery, whether you select a structured settlement plan, and if your case falls under any exceptions. As always, it is best to speak with a DC personal injury lawyer to navigate this process and recover as much as possible while maintaining your benefits.
How Much Money Can I Have and Still Qualify for Medicaid in Washington, DC?
This answer depends on whether you are married or single. The Medicaid program considers your MAGI. This is a modified adjusted gross income. In other words, MAGI is your gross income with certain changes and adjustments. Our legal team can assist you in determining your MAGI within the context of your personal injury case. Factors under consideration include whether you have dependent children under the age of 21, are pregnant, and have caretaker relatives. You are a non-MAGI Medicaid recipient if you are:
- Age 65 or over, blind, or have a disability, with resources at or below $4,000 for a single person
- SSI recipients
- Home and community-based waiver participants
- Long Term Care beneficiaries
- Medicare Savings Program recipients (QMB and QMB Plus)
- Foster Care/Adoption Assistance
- Medically Needy Spend Down
- Former Foster Care Children
- Under 19 years of age and qualify for TEFRA/Katie Beckett
- Have been screened and need treatment for Breast and Cervical Cancer
Do I Have to Report My Personal Injury Settlement to Medicaid?
Yes, you generally have to report your personal injury settlement to Medicaid. If your Medicaid paid any part of your bill and has a lien on your case, your personal injury attorney must pay back the lien out of any recovery. Of course, this puts Medicaid on notice. The Medicaid program has strict laws on notifying it after a personal injury recovery.
Should I Consult an Attorney Before Accepting a Settlement?
You should always consult with an attorney before accepting a settlement. Our consultations are always free, and there is never a legal fee unless we win. Thus, there is no harm in speaking with our experienced team and having a better understanding of your options.
Contact Gelb & Gelb Today
Whether you need assistance negotiating a fair settlement, handling Medicaid lien recovery, or determining liability, our team is ready to help. We have helped over 10,000 clients in the DC area and look forward to speaking with you about your potential claim.
Call our office today for a free consultation and case evaluation at (202) 331-7227.
