Answered A special needs trust or supplemental needs trust can protect benefits that are based on need, especially Medicaid and SSI. Medicare and SSD are not based on need. Medicare does require medical expenses that it paid to be paid back from the settlement if they are related to the injury involved in the lawsuit. There is an ongoing discussion to what extent Medicare may require some settlement funds to be set aside to repay it for future medical expenses it may have to pay. That issue is not yet resolved, but it is a concern. For these reasons, before settling any personal injury case (and a medical malpractice case is one) it is part of your lawyer's job to protect your settlement as much as possible from claims and setoffs, and to protect whatever benefits you are receiving or might expect to receive in the future. It is not easy to do because the law in this area is complex and changing fast.
Answered It Depends. The necessity of the special need's trust (snt) is dependent upon your specific case, and in particular the amount and nature of any subrogation liens, sometimes of which can be substantial. If substantial reimbursement is being sought, all options should be reviewed by the attorney and the client. Also, a analysis of future expected and unexpected medical costs and issues should be addressed while discussing the snt.
Answered Before I clicked past the headline question to the second question the special needs trust was what I was going to recommend. Do not rely on what you have been 'told'. You need to consult with your attorney, or an attorney experienced in issues such as yours, to review all of the facts beyond a couple of sentences. Based on what is at stake here and what you have to gain or lose, you can't afford NOT to consult with an attorney. In certain circumstances a special needs trust is a valid manner in which to preserve assets.
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This answer is offered for informational purposes only. It is not offered as, and does not constitute, legal advice. Laws vary widely from state to state. You should rely only on the advice given to you during a personal consultation by a local attorney who is thoroughly familiar with state laws and the area of practice in which your concern lies.