Medicaid

Medicaid is public health coverage for people with limited income and resources. It is funded by the federal government and the states together, and each state runs its own program under federal rules, so eligibility and benefits vary by state. Medicaid covers doctor and hospital care, and it is also the largest payer for nursing home and long-term care in many states. It is different from Medicare, which is mainly for people 65 and older regardless of income.

Medicaid matters in lawsuits and settlements for two reasons. First, because it is means-tested, a lump sum can push someone over the income or asset limits and cost them coverage, unless the money is planned for, for example with a special needs trust where allowed. Second, Medicaid has a right to be repaid for injury-related care it paid for when a third party, such as a company that caused the injury, later pays compensation. That repayment claim is often called a Medicaid lien and must be resolved before settlement money is distributed.

After death, states also recover some costs. Under 42 U.S.C. 1396p, states must seek recovery from the estates of certain Medicaid recipients, including people who were 55 or older when they received assistance, for costs such as nursing facility care.

Most small class action payments, such as a refund of a few dollars, do not affect Medicaid, but larger injury settlements can. Report changes to your state agency as required. See our guides on whether a settlement affects SSI or Medicaid and taxes on settlements.