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By the Legal Aid Society Information about receiving a lump sum payment from Medicaid and how it may affect your eligibility or coverage. If I receive a lump sum payment, like a court settlement, workers’ compensation payment, or inheritance, will it affect my Medicaid coverage?How a lump sum payment affects your Medicaid eligibility and coverage depends on your Medicaid eligibility category. There are two Medicaid eligibility categories: Modified Adjusted Gross Income (MAGI) and non-MAGI. MAGI Medicaid MAGI Medicaid is available to adults ages 19 to 64 who do not have Medicare, children under the age of 19, pregnant women, parents and caretaker relatives (even if they have Medicare), and certified disabled individuals who do not have Medicare. In order to qualify for MAGI Medicaid, your monthly household income must be less than the monthly income limits set by the State. But MAGI Medicaid does not have resource or asset limits. This means cash savings, bank accounts, property, and other assets you own are not taken into account when determining whether you are eligible for MAGI Medicaid. Under MAGI Medicaid, lump sum payments count as income in the month received if the federal income tax rules would treat the payment as income. You will need to know the source of the lump sum to determine whether the payment is counted as income. For example, under federal income tax rules, lottery winnings are counted as income but inheritances are not. If you have MAGI Medicaid, a lump sum payment is unlikely to affect your coverage immediately. Under MAGI Medicaid, even if the lump sum payment will push your income above the monthly income limit, your Medicaid coverage will continue until the end of your 12-month authorization period. If you receive a payment that puts your income above the monthly limit in your recertification month or towards the end of your 12-month authorization period, you will likely be Because there are no resource or asset limits in MAGI Medicaid, you can save the money into the following months and your Medicaid coverage will not be affected unless the interest you receive from the payment will push your monthly income over the Medicaid limit. Non-MAGI Medicaid Under non-MAGI Medicaid, a lump sum payment counts as income in the month received. Unlike MAGI recipients, non-MAGI Medicaid recipients do have a resource/asset test. If you save the lump sum in whole or in part into the next month, it is counted as a resource for that month along with your existing resources. If the lump sum payment pushes your income above the monthly income limit, you will be ineligible for that month only. You can be held liable to repay Medicaid for the cost of any services you receive during that month. If you save any of the lump sum payment into the months after you received it, and it pushes your resources above the Medicaid resource limit, you can be held liable to repay Medicaid for services you receive in all the months you are over the resource limit. To minimize the amount of money you may have to repay to Medicaid, you should transfer* or spend the money in the same month that you receive the payment. This limits your ineligibility to one month. If you delay until the next month or later, you are potentially liable to repay Medicaid for the cost of services you receive for two or more months. *Please note, if you transfer the money in order to qualify for Medicaid, you may face a penalty if you need Medicaid to pay for nursing home care anytime in next five years after the transfer. Therefore, it is best to contact a lawyer if you plan on transferring any of your lump sum payment. Do I need to report the lump sum payment?Yes. If you are a MAGI Medicaid recipient, you are required to report lump sum payments to the New York State of Health (NYSOH) even though you will likely maintain your Medicaid through your 12-month authorization period. If you are a non MAGI Medicaid recipient, you are required to report lump sum awards to the New York City Human Resources Administration (HRA) in the month you receive it and HRA will recalculate your Medicaid eligibility. What happens if I do not report the lump sum payment?If you do not report the lump sum payment in the month it is received, and it is later discovered that you continued to receive Medicaid benefits after the payment made you ineligible, you can be required to repay Medicaid for the cost of services you received in the months in which you were ineligible. If I no longer meet the Medicaid income and/or resource requirements because of a lump sum payment, is there any way I can keep Medicaid?In limited circumstances, you may be able to keep Medicaid even if a lump sum payment pushes you over the Medicaid income and/or resource limits. Medicaid Excess Income Program If you have non-MAGI Medicaid, you may be able to keep Medicaid through the “excess income” or “spend-down” program. If a lump sum payment disqualifies you from full Medicaid, HRA will send you a notice if you qualify for Medicaid through the excess income program. If you qualify for the program, to activate your Medicaid each month, you must either pay Medicaid or accumulate medical bills equal to the amount your income exceeds the Medicaid income limit. Medicaid Buy-in for Working People with Disabilities (MBIWPD) Program If you are 64 years or younger, have a disability determination, and you are working, you may be able to maintain Medicaid coverage through the Medicaid Buy-In for Working People with Disabilities (MBI-WPD) program, which has higher income and resource limits. If you think you may qualify, HRA can help you apply. Supplemental Needs Trust If you have a disability, you may be able to keep your Medicaid coverage by enrolling in a Supplemental Needs Trust (SNT). Depositing your excess income/resources in the trust will legally shield it from Medicaid. Medicaid cannot count anything you place in the trust when determining your Medicaid eligibility. You can use the funds in the trust in any way that directly benefits you, but you cannot ask for any of the money in the form of cash. Note, SNTs are not free, they may have an initial enrollment fee and a number of other maintenance fees. For more information on SNTs and Medicaid, visit NY Health Access. If I cannot keep Medicaid, do I have other options for health insurance coverage?Yes, you have many options for health insurance coverage in New York. Child Health Plus Essential Plan Qualified Health Plans (QHPs) through the New York State of Health Medicare Savings Programs I received a “lien” notice regarding my liability award or settlement, what does this mean?HRA is allowed to apply liens against personal injury-related settlements. A lien is a hold or claim on all or some of your settlement money. If you received a settlement to help you pay for a physical injury, HRA will issue a lien to recover any of the money Medicaid paid to treat that injury. A Medicaid lien can never make you responsible to pay back more money than you received in a settlement. If you receive a lien notice, you should contact the attorney who handled the lawsuit named in the notice and ask them to contact HRA on your behalf. If you are currently negotiating a personal injury-related settlement and you had Medicaid at the time of the injury, ask your attorney to address the issue of a possible Medicaid lien. DisclaimerThe information in this document has been prepared by The Legal Aid Society for informational purposes only and is not legal advice. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. You should not act upon any information without retaining professional legal counsel.
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