Protecting Your Medicaid Eligibility After a Settlement

Medicaid is needs-based, so eligibility depends on staying under strict asset limits. In Florida in 2026, the countable-asset limit for the long-term-care Medicaid programs is $2,000 for a single applicant. There is also an income cap — $2,982 per month in 2026 — for those programs.

A settlement paid directly into your name is a countable asset. Even a modest settlement pushes you far over $2,000, and Medicaid can end your coverage. For someone who depends on Medicaid for home health care, prescriptions, therapy, or long-term care, that loss can be catastrophic — often worth far more over time than the settlement itself.

The solution is to keep the settlement out of your direct ownership by holding it in a properly structured trust — typically a special needs trust for an injured person. Because the money is held in the trust rather than owned by you, it is not counted against the $2,000 asset limit, so your Medicaid eligibility is preserved.

The trust then pays for the many things Medicaid does not cover, while Medicaid continues covering what it covers. This is the core of settlement planning for anyone on Medicaid: protect the eligibility, and use the trust to fill the gaps.

Not everything counts toward the $2,000 limit. Florida exempts certain assets — for example, a primary residence within an equity limit, and one vehicle, among others. But a cash settlement sitting in your name is fully countable, which is exactly why direct payment is so dangerous for benefit recipients.

There are also rules about transferring assets — Florida's long-term-care Medicaid has a five-year "look-back" period for certain transfers. This is part of why settlement planning should be done correctly and with professional guidance from the start, rather than improvised after the money has already arrived.