Government benefits, such as Medicaid and Supplemental Security Income (SSI) are need based. If an injured party comes into a large personal-injury recovery, even though this money is not considered income, it is considered an asset and therefore becomes a part of the government’s evaluation of your need for their money. So, in practice, a personal-injury recovery can result in the reduction or elimination of certain government benefits.
An experienced personal-injury lawyer or Miami car accident lawyer, depending on the circumstances, may guide the injured party to an expert who can help them transfer their personal-injury settlement or verdict proceeds into a Special Needs Trust (SNT) to protect government benefits. This is because, the money will technically belong to the SNT, under the direction of a trustee, not the injured party (who will be named as the beneficiary of the SNT). The SNT trustee will specifically not pay for food or shelter for the client (these are the items the government benefits are paying for, subject to some exceptions). The SNT, however, will pay for other items, known as special needs, such as: clothing, transportation, education, medical expenses, recreation, vacation, entertainment, etc…
Again, the trustee is under strict legally-binding instructions to direct funds in the trust in order to purchase, for the beneficiary, those items that are not covered by SSI or Medicaid, thereby protecting those benefits. Importantly, the trustee usually cannot make cash payments directly to the beneficiary, but will instead pay the source of their special needs directly.
There are several types of Special Needs Trusts. These are governed by 42 U.S.C. Section 1396p(d)(4)(A) & (C).