Roland's situation: a settlement lands on top of Medicaid
Roland is 74, lives at home in Port Orange, and receives Florida Medicaid long-term care benefits that help pay for the in-home aide who assists him a few days a week. He is a composite of clients I have worked with, not an actual person, but his situation is a common one. A distracted driver rear-ended him at a light on Nova Road, and after months of treatment and negotiation, his personal injury attorney has a $150,000 settlement offer on the table.
That is good news for Roland's medical bills and his pain and suffering. It is also, without planning, a serious threat to his Medicaid. Florida's Medicaid program (like every state's) caps countable assets for an individual at a very low figure, and a lump sum settlement deposited into Roland's checking account would push him far over that line the moment he receives it. The fix is not to give up the settlement. The fix is to route it correctly.
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Book Free Consult or call (888) 388-8445The Medicaid lien: what AHCA can actually claim
Before Roland ever sees a dollar, Florida's Agency for Health Care Administration (AHCA) has a right to be reimbursed for the Medicaid dollars already spent on care related to his crash injuries. This is the Medicaid lien, and it is governed by Florida Statute § 409.910.
What surprises a lot of families is that AHCA cannot simply take a cut of the whole settlement. Florida's Supreme Court, in Giraldo v. AHCA, held that the state's recovery is limited to the portion of a settlement that actually represents past medical expenses. Money that compensates Roland for pain and suffering, lost wages, or future medical needs is generally off limits to the lien. In practice, this means Roland's personal injury attorney and his elder law attorney need to work together (more on that below) to make sure the settlement documents and any allocation reflect this distinction, so the lien is calculated fairly rather than against the full $150,000.
The reporting duty: why Roland has to tell Medicaid now
Separate from the lien, Roland has an ongoing duty to report changes in circumstances to Medicaid, and a pending personal injury claim and any resulting recovery is exactly the kind of change that must be disclosed. This is not optional and it is not something to handle after the check arrives.
The trust options: (d)(4)(A) under 65 versus pooled trust for Roland
Federal law gives families two main tools for turning a settlement from a countable asset into a non-countable one, and Roland's age determines which door is open to him.
- First-party special needs trust, or (d)(4)(A) trust: This trust type is built for beneficiaries who are under age 65 and meet Social Security's disability standard. Because Roland is 74, this option is not available to him directly.
- Pooled special needs trust, or (d)(4)(C) trust: This is the option built for Roland. A nonprofit organization manages individual sub-accounts for many beneficiaries within one master trust, invests the funds, and issues distributions for each person's needs. Critically, pooled trusts have no age cutoff, so they remain available to Medicaid recipients over 65 in a way that individual first-party trusts do not.
Roland's settlement, once the Medicaid lien is resolved, can be transferred into a sub-account of a Florida pooled trust. From Medicaid's perspective, the funds are no longer his personal countable asset. From a practical perspective, the money is still there for him, managed by a trustee for his benefit.
Sole benefit, payback, and what the trust can pay for
Both types of first-party trusts share two core features that Medicaid requires in exchange for letting the funds sit outside Roland's countable assets.
- Sole benefit rule: Distributions from the trust must be for Roland's benefit, not diverted to help other family members or pay ordinary household expenses that Medicaid or his income already covers.
- Medicaid payback: When Roland passes away, Florida Medicaid is entitled to be reimbursed from whatever remains in his trust sub-account, up to the total amount of benefits paid on his behalf during his lifetime. Whatever is left after that repayment can pass to his family or, in a pooled trust, in some cases to the nonprofit's charitable pool, depending on the trust's terms.
In between, the trust can pay for a wide range of things that improve Roland's quality of life without disqualifying him: uncovered dental work, a specially adapted vehicle or vehicle modifications, personal care items, travel to visit family, home modifications, and supplemental caregiving beyond what Medicaid provides. What it generally should not do is pay for things Medicaid already covers or hand cash directly to Roland, since direct cash in his own name recreates the very problem the trust was designed to solve.
Why the PI lawyer and the elder law lawyer need to talk to each other
Roland's case shows why personal injury and Medicaid planning cannot be handled in separate silos. His personal injury attorney is focused on maximizing the settlement and correctly documenting how much of it relates to past medical bills versus other damages, which affects the Medicaid lien under § 409.910. His elder law attorney is focused on where the settlement lands once it is paid: making sure a pooled trust sub-account is established and funded correctly, before disbursement, and that AHCA's lien and Roland's ongoing eligibility are both addressed in the settlement paperwork itself.
When these two attorneys coordinate early, the settlement can be structured so funds intended for the trust go there directly, the lien is negotiated down to its proper legal scope, and Roland's Medicaid caseworker receives accurate, timely notice. When they do not coordinate, families often end up scrambling after the fact to unwind a benefits termination that could have been avoided entirely.
Frequently Asked Questions
The Truestead Takeaway
Roland's settlement was never really the threat to his Medicaid; the timing and structure of how he received it was. Because he is over 65, the door to an individual first-party special needs trust is closed to him, but Florida's pooled special needs trusts exist for exactly this situation, letting his settlement fund a protected account that still benefits him without counting against his Medicaid eligibility. The work has to happen before the check is cashed, with his personal injury attorney and an elder law attorney coordinating on the lien, the trust, and the required Medicaid reporting. If your family is facing a settlement while a parent or loved one is on Florida Medicaid, the sensible next step is to pause before accepting or depositing anything and have both attorneys review the specific numbers and timeline together.
Sources
- Florida Senate, Chapter 409 Section 910, Florida Statutes
- Florida Supreme Court, Giraldo v. Agency for Health Care Administration, No. SC17-297
- Special Needs Alliance, Special Needs Trusts and Personal Injury Settlements, June 2026
- Special Needs Alliance, When Should You Consider a Pooled Trust?, December 2024
- Elder Needs Law, Florida Special Needs Trust Planning Guide
Talk to a Florida Attorney
Every family’s situation is different. Schedule a consultation with Arthur Simpson, Esq. to review your plan and your options under Florida law.
Schedule a Consultation →This article is for general informational purposes only and does not constitute legal advice, nor does reading it create an attorney-client relationship. Florida estate, elder, probate, and real estate law are fact-specific and change over time. Consult a licensed Florida attorney about your individual circumstances. Arthur Simpson, Esq. is licensed to practice law in the State of Florida. Attorney advertising.
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