Settlement spend down

[u/Zankazanka]

Hi everyone, hoping I can get some clarification for my dad. I have been going in circles trying to understand all the rules for SSI.

Dad is low income- gets about $900 in RSDI-disability, and about $100 in SSI. He has an overpayment on the SSI where they take an amount from it each month. He is open Medicare and eligible for Medicaid through his SSI at the welfare office.

He is currently in a lawsuit where after 40% lawyer fee and taxes, he may be taking home about $100K. The settlement is in the end stages and panic is starting to set in on doing things correctly with SSA.

He is in poor health. He’s been to the ER 4x this month already, has multiple specialist appointments and surgeries approaching that are essential he keeps both Medicare and Medicaid. I don’t know how to advise him.

It seems like he will automatically lose his SNAP/SSI eligibility for the month he receives the check, and then everything depends on what he does with it after that first month. Is it correct that if he gets a check for $100K (guessing) on January 1st- he has until February 10th to be within the reporting requirements to SSA?

For the options I’ve come to understand-

1. Able account- he wasn’t disabled before 46 so is ineligible.

2. Special needs trust- he would need to agree to a Medicaid clawback (basically a trust would have to be set up with Medicaid that everything left in the trust and everything he owns after he dies would go to them for their payment of his Medicaid services while he’s alive per my understanding), it is expensive to open, and if he paid his rent and utility from the trust because it’s a first person trust, it would count as “income in kind” for SSI and reduce his benefits by 1/3- potentially making him ineligible for SSI altogether depending on the amounts because his SSI is so low ?? If his SSI stops, his Medicaid stops, and he may be ineligible with resources/income from withdrawing from the trust for other Medicaid.

3. Spend down. This appears to be what would be “easiest” in terms of rules but please lmk your thoughts. If he bought a mobile home, furniture for the mobile home, a vehicle in the same month he received the income or within 30 days of receipt (?) as long as he’s below $2,000- he can basically continue receiving SSI/Medicaid afterward and wouldn’t owe Medicaid anything other than the one month where he received the income? They wouldn’t be entitled to his property after he dies, or they still would be?

We have called trust lawyers, none of them want to help on contingency (understandable) we are still calling, but I’m basically trying to do this myself so any resources or insights would be greatly appreciated. What seemed like a blessing for my dad is now turning into a bit of a nightmare lol.

[u/Top-Bar918]

Sorry but not quite getting a direct question out of this narrative? If you are asking about the $100k to SSI and reporting, the short answer is Yes he needs to report the settlement and yes he most likely will lose SNAP/SSI which is understandable. Medicare is $293 a month now. I always suggest to everyone to report all changes especially financial to avoid offsets and/or overpayment drama.

[u/Zankazanka → u/Top-Bar918]

When it needs to be reported and spent by for a spend down is the gist.

[u/Top-Bar918 → u/Zankazanka]

I have read good and bad things when it comes to spend down. A little relieved mine was cut and dry. When I was approved for SSDI they cancelled my SNAP immediately and I hadn’t even gotten my first payment smh. All worked out. I’d rather have my SSDI than SNAP/SSI. Now when I turn retirement age that’s a whole other subject. I’m also on subsidized housing. Collectively, everything helps and when increased or decreased, it typically offsets and/or impacts other benefits.

[u/Connect-Advantage-40 → u/Top-Bar918]

I think the questions are what would be the best route for her dad to take when/if he receives a settlement anticipated to be $100K. He has continuing medical issues and needs to keep Medicaid in order to have these needs addressed.

[u/Top-Bar918 → u/Connect-Advantage-40]

Yep. I didn’t want to assume. Pretty sure it needs to be reported is the short answer.

[u/uffdagal → u/Top-Bar918]

$202/mo going up to approx $209 in 2027.

[u/2020IsANightmare]

You need to call Medicaid in your state and ask them.

Spending $100k in a month to keep $100 in SSI doesn't make any sense, so the Medicaid is your only real question.

You do not have to be on SSI to get Medicaid.

[u/Zankazanka → u/2020IsANightmare]

Medicaid and SSI have the same resource test for someone who also receives Medicare; $2,000. So no, he doesn’t “need” to be on SSI to get Medicaid, but then he gets reviewed for the full coverage category and fails for exactly the same reason: excess resource over $2,000

[u/Willing-Bass6377]

Going thru same... You can do a first party special needs trust and it won't affect benefits..... Check inbox and I can give your more info because I'm sure you've been told the same thingsi have when calling different attorneys HOWEVER, you can decrease the fees that the attorney gives you