Personal Injury Settlements and What They Could Mean for Medicaid Coverage

Personal Injury Settlements and What They Could Mean for Medicaid Coverage

Many people in Colorado rely on Medicaid and Medicare for healthcare coverage but anyone who has spent any length of time receiving benefits from the programs knows there are strict eligibility requirements for them. According to, The Affordable Care Act made a very simple standard for qualification calculation. Firstly, an individual or family must be eligible based on income under the Modified Adjusted Gross Income (MAGI) standard. These rules apply to most Colorado Medicaid programs except for those which cater to those over 65 years old and those who have a documented disability. There are strict, different standards for different people to qualify for Medicaid benefits. Most of these standards are income-based. The most common calculated amount is 260% of Federal Poverty Level (or “FPL”). These income-based standards are very strict to the point where Colorado Medicaid recipients must update any changes to their income to make sure they still qualify for Colorado Medicaid benefits after income changes. It is no secret that when a household goes over the income-based standard for qualification, Colorado Medicaid benefits cease. But what happens when a Colorado Medicaid beneficiary comes into a large one-time sum of money, like a Personal Injury settlement?

According to their website, Colorado’s Medicaid Program checks member eligibility at least every 12 months to make sure those on the program still have need of it. If a recipient becomes disqualified during that period, they are disqualified and can reapply when their income falls back into the required range for coverage. So if a person who receives Medicaid coverage prior to an auto collision gets a settlement from the other party’s insurance coverage following treatment for their significant injuries, the settlement could potentially make the person’s income higher than the required range to keep his or her medical coverage. This means that suffering victims of other drivers’ negligence could have insult added to injury in the form of losing their health care coverage just when they have recovered from the significant injuries they sustained in auto accidents. So how can injured victims get the justice they deserve and keep their medical insurance under Colorado Medicaid?

There may be at least one way to accomplish this goal honestly. With the help of a lawyer, a victim could keep the settlement in a Trust. State laws vary on this question but in Kansas, for example, if a person places assets into an Irrevocable Trust—or a Trust where the person putting in the assets has no way of accessing the money in the Trust for their own benefit—the Trust assets are not considered available to the Medicaid applicant for Medicaid purposes (Kansas Long-Term Care Handbook, §1.15.6[b]2). So if the victim in an auto accident has no access to the settlement money, at least in Kansas, under certain circumstances, the victim could maintain his or her Medicaid coverage. This raises other questions about why a victim gets a settlement if he or she cannot access it. But this area of law is tricky and complicated, especially when a victim of a car accident is focused on recovering from the injuries they suffered.

Larson & Larimer have decades of experience fighting for the rights of individuals and their loved ones who were injured by the negligence of others. Many of our clients receive Medicaid benefits prior to and following their injuries. If you or someone you know has experienced these sorts of catastrophic injuries and you fear no one can help, please contact Larson & Larimer at (303)221-0039 to schedule your free consultation.

Sources:, Kansas Long-Term Care Handbook §1.15.6 Supplement.