Personal Injury Awards for Public Benefits Recipients in New York 

Successfully receiving a personal injury award is a significant step toward justice and financial support after an injury. However, for New York residents who rely on public benefits like Supplemental Security Income (SSI) or Medicaid, a personal injury award can have unexpected consequences. Without proper planning, recipients risk losing crucial public benefits. This intersection of personal injury awards and public benefit eligibility presents unique challenges with far-reaching impacts. 

This guide explains how personal injury awards affect public benefit recipients, explores strategies to manage these challenges, and highlights the importance of seeking legal advice from an experienced personal injury lawyer and an attorney who focuses on estate planning. 

Understanding Public Benefits and How They Work 

Public benefit programs like SSI and Medicaid are designed as safety nets for individuals with limited income or resources. These programs ensure that eligible applicants receive help with daily living expenses or healthcare costs. However, they are needs-based, meaning eligibility depends heavily on strict income and asset limits. 

Key Definitions 

• Income: Any recurring payments, such as pensions, retirement distributions, or wages. 
• Resources: Assets like cash or property that could be converted into money to cover expenses. 

For New York residents reliant on these programs, exceeding the income or resource limits by even a small amount can result in disqualification. 

The Impact of Personal Injury Awards on Public Benefits 

Receiving a personal injury award can unintentionally make a recipient ineligible for needs-based public benefits. Frequently, this happens even before the settlement funds are disbursed to the client. 

When Does the Award Impact Benefits? 

The personal injury award is considered “available” to the recipient as soon as it is deposited into the personal injury plaintiff law firm’s escrow account. This classification can immediately impact the client’s SSI or Medicaid eligibility, even if the funds are not yet distributed. 

Loss of Benefits Without Planning 

Without planning, personal injury award recipients may: 

• Lose their SSI or Medicaid eligibility. 
• Be required to reimburse the government for services received during ineligibility. 
• Face reduced access to critical healthcare services and financial support. 

Ironically, failing to prepare for the implications of a personal injury award could place the injured person in a worse position than if no legal action was taken. Partnering with knowledgeable legal representation, such as a personal injury lawyer, is vital to navigating these complexities. 

Strategies to Protect Public Benefits After a Personal Injury Award 

Public benefit recipients need to take proactive steps to protect both their awards and their eligibility for crucial support programs. Proper planning ensures the client can use a portion of their personal injury settlement without losing access to Medicaid, SSI, or other benefits. 

1. Assess Benefit Program Guidelines

   Each benefit program—SSI, Medicaid, and others—has distinct rules regarding acceptable income and resources. Understanding these guidelines is critical for determining the strategy.

2. Plan Before Approval of a Settlement

   It is essential to develop a planning strategy before the client signs a personal injury release document. Waiting too long could limit the options available to protect benefits. Collaborating with personal injury attorneys early can help avoid costly mistakes.

3. Utilize Special Needs Trusts (SNTs)

   A Special Needs Trust is one of the most effective tools for preserving eligibility. This trust allows recipients to shield their settlement funds from being counted as income or a resource under benefit program guidelines.

Types of Special Needs Trusts:

• First-Party Trust: Often used for individuals under 65 who want to secure public benefits.
• Pooled Trust: Managed by nonprofit organizations and ideal for situations involving smaller settlements.

4. Utilize Medicaid Trusts

   In most states, this option isn’t available because of the 60-month lookback period for both Community and Nursing Home Medicaid. However, New York State is different—it doesn’t currently have a 60-month lookback for Community Medicaid. This makes planning in New York much more flexible compared to many other states.

5. Work with an Attorney Skilled in Different Legal Areas

   Collaborating with different attorneys experienced in estate planning, personal injury, immigration, and public benefits law ensures a well-rounded approach. These attorneys can develop strategies tailored to each client’s unique needs, helping to preserve important benefits while maximizing outcomes.

6. Set Up Sub-Accounts for Immediate Needs

   For clients who require immediate access to a portion of their funds, structured planning can allocate settlement proceeds while minimizing the impact on benefits.

7. Monitor Statute of Limitations

   Clients and legal representatives must remain aware of filing deadlines. Statutes of limitations for personal injury claims in New York vary depending on the situation, and missing deadlines could result in forfeited rights to compensation.

Why Advance Planning Matters 

Failing to properly plan for the interplay of personal injury awards and public benefits can result in a range of avoidable consequences. These challenges extend beyond finances, often leading to wasted time and effort trying to reinstate lost benefits. 

On the other hand, with thorough planning, clients can maximize their personal injury awards while preserving access to critical support systems. For example, consider a slip-and-fall accident victim who receives a settlement intended to cover long-term medical needs. Without planning, that settlement could disqualify the person from Medicaid, forcing them to pay medical expenses out of pocket and depleting their funds quickly. A detailed pre-settlement plan, however, might allow the client to retain Medicaid eligibility and use their settlement funds effectively. 

Get the Support You Deserve 

If you’re receiving public benefits and pursuing a personal injury claim or settlement in New York, it’s essential to plan ahead to preserve your benefits while seeking compensation. Individuals facing legal action for personal injury or wrongful death scenarios should ensure they work with experienced attorneys to address both compensation and benefit eligibility. 

While the Law Offices of Vlad Portnoy focus on estate planning, we often collaborate with personal injury attorneys. Together, we can help safeguard your public benefits, address concerns with the insurance company, and secure your financial future. 

Don’t leave your future to chance. Contact the Law Offices of Vlad Portnoy today to discuss your options and develop an estate plan that protects your benefits.