Having your lawsuit finally settle can feel like a weight lifted off your shoulders.
After everything you’ve been through, it often brings a sense of closure, along with the financial relief you’ve long awaited. But if you or a loved one also relies on government benefits, like Medicaid, housing assistance, SNAP benefits, or Supplemental Security Income (“SSI”), there’s something important to know: receiving a lump sum of money without careful planning can put those benefits at risk.
If settlement funds aren’t handled correctly, the government may cut off benefits, and they may not be restored even after the settlement funds run out. Requalifying for public benefits can take months, and that waiting period can be extremely difficult for someone who depends on them for medical care or daily living expenses. That’s why it’s worth understanding, before your settlement arrives, how those funds could affect the benefits you or your family member currently receive.
This is especially important if you or your loved one is disabled and unable to manage finances independently, whether through a guardianship and/or conservatorship, or through a Power of Attorney. If you’re receiving Medicaid, SSI, or similar benefits, keep in mind that eligibility isn’t based only on your income; it also looks at your non-exempt assets.
A sudden settlement deposited directly into a personal bank account can push you over the asset limit and jeopardize benefits like Medicaid, which for many people is what stands between them and medical expenses that could otherwise use up the entire settlement. A Columbia, MO Student Protection Lawyer can help individuals and families understand how a settlement may affect government benefits and explore options for protecting those benefits when appropriate.
Fortunately, there are tools designed specifically for this situation.
Special Needs Trusts
A Special Needs Trust, also called a supplemental needs or supplemental care trust, is designed to hold settlement funds on your behalf without counting against the asset limits for programs like Medicaid or SSI. This type of trust can be used to help ensure an individual maintains their eligibility for government benefits.
To qualify for this type of trust, five conditions must be met:
- The assets must belong to you as the individual beneficiary.
- You must be under 65 years old.
- You must be disabled, receiving Social Security Disability Insurance (SSDI) or SSI, or otherwise meet the Social Security Administration’s standard of disability.
- The trust must be established by a parent, grandparent, conservator, legal guardian, or a court on your behalf.
- The trust must be for your sole benefit.
Once the trust is set up, your settlement funds are deposited into it and used to support you over time. One thing to be aware of: any funds remaining in the trust after your death must first go toward reimbursing Medicaid for the cost of care you received during your lifetime.
What can the money in the trust be used for?
That depends on the specific benefits you receive, but generally, the trust is meant
to supplement, not replace, what Medicaid already covers. Common uses include:
- Recreational activities
- Dental care
- Education
- Medical expenses beyond what Medicaid covers
If a Special Needs Trust seems like the right fit, an estate planning attorney can help you or your guardian get one established and answer any questions along the way. In Missouri, there are two primary paths:
- Individual Special Needs trust with a private individual or a corporation (typically a bank’s trust department) serving as trustee.
- A pooled trust, where a non-profit organization manages the trust for you.
Two Missouri non-profits that offer this option are ARCare and Midwest Special Needs Trust.
Which option makes the most sense depends on your individual needs and whether you have someone available and willing to serve as trustee.
MOABLE Accounts
If a Special Needs Trust isn’t a good fit, perhaps because your settlement amount doesn’t justify the cost of setting one up, a MOABLE account may be a better option.
MOABLE accounts are available to Missouri residents with a qualifying disability. You have a qualifying disability if you are blind, or have a medically determinable physical or mental impairment that results in marked and severe functional limitations, your condition developed before the age of 26, and it will last, or has lasted, at least a year. Effective January 1, 2026, under the federal BLE Age Adjustment Act, that threshold rises to age 46, meaning significantly
more people will become eligible for a MOABLE account.
To be eligible for a MOABLE account, you must also confirm one of the following:
- You are eligible for SSI or SSDI because of a disability;
- You have a condition listed on the Social Security Administration’s List of Compassionate Allowances Conditions;
- You experience blindness as determined under the Social Security Act; or
- You have (and can provide, if requested) a signed diagnosis of your qualifying disability from a licensed physician.
As of today, you can contribute up to $19,000 per year to a MOABLE account if you’re unemployed, or $34,060 per year if you’re employed. These funds will not adversely affect federally means-tested benefits. There is a $5 quarterly account fee, plus a minimal asset-based fee that varies by investment option.
One important limit if you receive SSI specifically: while the annual contribution limits above apply to everyone, you must keep your total account balance under $100,000 to continue receiving SSI. Other benefits, including Medicaid, don’t have these same limitations.
What can MOABLE funds be used for?
Once your account is set up through the state’s website (moable.com), you can use the funds for qualified expenses such as:
- Living expenses
- Education
- Housing
- Transportation
- Employment training and support
- Assistive technology
- Personal support services
- Health, prevention, and wellness
- Financial management
- Administrative services
Legal Fees
Funeral and burial expenses
You (or your legal guardian) may choose from a range of investment options, similar to what’s available in a 401(k) or IRA, and can pick the approach that fits your situation best.
When does a MOABLE account make the most sense?
This option tends to work well if your settlement funds will come in annual increments, or if your portion of the funds falls under the annual contribution limit. With minimal fees and, especially with the age-eligibility change coming in January 2026, a much larger pool of people now qualifying, a MOABLE account is worth considering.
The Bottom Line
Receiving a settlement should improve your life, not put your existing benefits at risk. If you or a loved one relies on Medicaid, SSI, or other means-tested programs, it’s worth exploring whether a Special Needs Trust or a MOABLE account is the right tool to protect those benefits while still putting your settlement funds to good use. Talking with an attorney who handles these tools
regularly can help you figure out which path fits your situation and keep you eligible for the care and support you depend on. Contact TGH Litigation to discuss whether a Special Needs Trust, MOABLE account, or another planning option may help protect essential government benefits while putting settlement funds to good use.
Additional Sources:
- Title XVI of the Social Security Act. See 42 U.S.C. § 1381 et seq.
- Chapter 475, R.S.Mo. (Missouri statutes on Guardianships and Conservatorships). Guardianships address incompetency or inability to make life decisions such as medical care, living arrangements, or daily activities (§ 475.010, R.S.Mo.). Conservatorships address disability or inability to make financial decisions such as managing finances or entering contracts (§ 475.010, R.S.Mo.).
- 42 U.S.C. § 1382a; 42 C.F.R. § 435.831.
- 42 U.S.C. § 1396a (non-exempt assets cannot exceed $2,000).
- 42 U.S.C. § 1396p(d)(4)(A), (B), and (C).
- Title II of the Social Security Act. See 42 U.S.C. § 403 et seq.
- 42 U.S.C. § 1396p(d)(4).
- ARCare — Barbara Helm, 913-648-0233, 8417 Santa Fe Dr, Ste 107, Overland Park, KS. Home | arcare@crn.org. Midwest Special Needs Trust, 573-256-5055, PO Box 7629, Columbia, MO 65205.
- §§ 209.605–209.0645, R.S.Mo.; MOABLE, MOABLE, moable.com (last visited Nov. 17, 2025).
- ABLE Age Adjustment Act (2022), raising the qualifying-disability onset age from 26 to 46, effective Jan. 1, 2026. Home – ABLE National Resource Center — ABLE Age Adjustment Act Fact Sheet
- MOABLE, MOABLE Eligibility, moable.com/how-it-works/eligibility (last visited Nov. 17, 2025).
- SSA, List of Compassionate Allowances, Compassionate Allowances Website Home Page .
- MOABLE, MOABLE Benefits, moable.com/benefits.