Does Medicaid Cover Assisted Living? Settlement Strategies for Claimants in Need of Long-Term Care


Medicaid eligibility for individuals in need of long-term care can get especially complicated when a personal injury settlement enters the mix. An experienced settlement consultant will help create a plan that preserves Medicaid benefits while also ensuring the settlement proceeds will cover other financial and medical needs.

What is Medicaid?

Medicaid (Medi-Cal in California) is a wide-ranging, jointly funded state and federal health care program for certain economically challenged and disabled individuals. As a needs-based benefit, eligibility is subject to income and asset tests, with varying income limits and current asset limits of $2,000 (single individuals) and $3,000 (married couples)1.

Most states’ Medicaid programs cover at least a portion of assisted living, nursing home, in-home attendant care, and adult day health care costs. If your Medicaid-eligible client will be receiving a settlement, it is imperative to handle their settlement funds in a manner that preserves Medicaid eligibility.

Also worthy of note are other needs-based benefits that can be impacted by a lump sum recovery, including, but not limited to Supplemental Security Income (SSI), SNAP (food stamps/CalFresh), subsidized housing (Section 8), and Children’s Health Insurance Program (CHIP). Injured claimants with disabilities may want to consider utilizing a first-party special needs trust or a pooled trust to preserve settlement funds.

First-Party Special Needs Trust

A first-party special needs trust (SNT) is funded with the beneficiary’s assets (in this case, the claimant’s settlement funds). The SNT can then be used to purchase goods and services not covered by Medicaid. Allowable purchases typically include personal care and hygiene items, eyeglasses/contact lenses, home or auto accessibility modifications, rehabilitation, therapy services, and more.

Pooled Special Needs Trust

If a first-party SNT is cost-prohibitive for the injured claimant or if the claimant is over the age of 65, then a pooled special needs trust (PSNT) may be a better option. A nonprofit organization manages a PSNT. Each beneficiary has a separate sub-account within the main trust account, and the assets are “pooled” for investment. Again, the beneficiary’s assets are used to fund the sub-account, and allowable distributions are similar to those associated with first-party SNTs.

Contact Sage

For more information about settlement options for Medicaid-eligible claimants, contact Sage Settlement Consulting online or by phone today at (855) 288-7243.

1 As of July 1, 2022, California raised its Medi-Cal asset limits. More information can be found here.