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Will a Personal Injury Settlement Affect My Food Stamps?

If you received a personal injury settlement, it may affect your eligibility for food stamps, especially if you received a large lump sum. You may also need to report a settlement to other agencies if you are part of additional needs-based programs. In some cases, you can take steps to prevent a settlement from affecting your eligibility for needs-based programs like food stamps. Our personal injury attorneys can walk you through your options.

Food Stamp Eligibility and Reporting a Personal Injury Settlement

Food stamps, sometimes called the Supplemental Nutrition Assistance Program (SNAP), help low-income individuals and families receive funds to pay for groceries. SNAP has income, resource, and work requirements. Income and resource requirements are based on:

  • Before-tax (gross) income
  • After-tax and deductions (net) income
  • Cash on hand
  • Funds in the bank

The actual dollar amounts vary by state. For instance, in California’s CalFresh program, you must have a current bank balance of under $2,001 in both savings and checking. If you share your household with someone who has a disability or is 60 or over, the limit is a bank balance under $3,001 in both savings and checking. You also must meet certain annual household income limits based on the size of your household.

Because food stamps have these requirements, a large personal injury settlement could temporarily disqualify you from SNAP benefits.

Don’t Hide a Settlement—Report It

If you are concerned about your finances even after a settlement, you may feel tempted to avoid reporting a windfall to continue receiving food stamps. However, it’s always ultimately in your best interest to report a change to your income or resources, just in case.

You can also always reach out for help. If you’re worried about having your assistance cut off due to a personal injury settlement or aren’t sure how to report the change to your income and resources, our attorneys can help you navigate the process.

Do You Need to Notify Other Places of a Personal Injury Settlement?

Food stamps aren’t the only program that a settlement might affect. If you are a part of other government programs, you may need to report a settlement to them as well. Whether a settlement will affect your eligibility depends on if the program is based on income or work history.

Keep in mind that, like with food stamps, you might only face temporary disqualification from these programs. You can reapply later if your financial situation changes again.

Medical Benefits: Medicare vs. Medicaid Eligibility

Medicare is based on work history, whereas Medicaid is based on income. Consequently, your eligibility for the former likely won’t change, while your eligibility for the latter might.

As the U.S. Department of Health and Human Services (HHS) explains, Medicare is a program for people over 65, while Medicaid is for those with limited income and resources. Like food stamps, Medicaid is run by each state, so your eligibility will depend on your specific state’s requirements.

If you experienced a change in your income, such as by receiving a settlement, you may need to report it to Medicaid to determine if you are still eligible for healthcare benefits.

Disability Benefits: SSDI Vs. SSI Eligibility

The Social Security Administration (SSA) offers two assistance programs to people with qualifying disabling conditions: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI).

SSDI is another work-based program that provides a kind of insurance coverage for people struggling with a disability. By contrast, SSI is for low-income individuals with disabilities and, as the name suggests, provides additional income. SSDI isn’t affected by a settlement, but your SSI eligibility might change.

Can You Prevent a Personal Injury Settlement From Affecting Food Stamps?

In some cases, your personal injury settlement won’t affect your food stamps. It can depend on the size of your settlement and how you use it. For example, if most of your settlement is for paying off your bills and expenses, you may not end up with a significant change in your actual resources and income.

However, if you receive a large settlement for personal injury, including damages for non-economic losses like pain and suffering, emotional distress, and changed quality of life, you can explore other options for avoiding a change in your eligibility for government programs.

Lump Sum vs. Structured Settlements

In a personal injury settlement, you have two options for how you receive the compensation:

  • Lump sum. You receive the full settlement up front in one large payment.
  • Structured settlement. You receive the settlement through regular payments over time.

As Forbes points out, there are several types of structured settlements. You can receive a larger sum upfront to help pay off your bills, followed by smaller payments for the remainder of the settlement. Alternatively, the amount you receive can increase or decrease over time.

Which form your payment takes is hammered out in your settlement. Our personal injury lawyers can work with you throughout the negotiation process to determine if a lump sum or structured settlement is right for you. If SNAP and other needs-based programs are a concern for you, we can consider that when working on settlement terms.

Special Needs Trusts

If you or a loved one was left physically or mentally disabled by the accident at the heart of your personal injury case, you can explore the option of creating a special needs trust.

Funds placed in trust are considered owned by the trust, rather than owned by a person. A special needs trust can therefore hold funds for someone who is disabled without counting it as part of their income or resources. As a result, these types of trusts can help prevent a personal injury settlement from affecting your food stamp eligibility.

Drawing up this type of trust requires drafting specific legal paperwork and naming trustees and beneficiaries. If you have questions about this option, talk to a lawyer. We can work to ensure assets and income placed in a trust remain protected.

A Lawyer Can Clarify What to Do After a Personal Injury Settlement

The legal team at KJT Law Group can answer any of your questions about how your personal injury settlement will affect food stamps and other needs-based government programs. We can handle the entire personal injury process, from filing claims and suits to negotiating settlement terms. Contact us at any time to receive a free consultation: (818) 507-8525.

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