Do I Have to Report My Settlement to Medicaid? (California Guide)

You just got a settlement check. Maybe you’re set to get one in the near future. And the first thing running through your head? “Am I about to lose my Medicaid?”

Potentially. But you need to report it within 10 days.

Reporting your settlement does not automatically mean you lose your healthcare or hand over all your money. Not if you handle this correctly. The state wants to know about it, sure. But planning for this moment is completely legal. Hiding it is fraud. Big difference.

Key Takeaways

• California eliminated asset limits for Medi-Cal as of January 1, 2024. Having money in the bank no longer automatically disqualifies you from coverage.
• You must report any change in income within 10 days to your county social services office.
• Medi-Cal can recover the medical costs it paid for your injury, but state law caps its recovery so it cannot take more than you actually receive after attorney fees.
• If you receive SSI alongside Medi-Cal, the federal $2,000 asset limit still applies to you.

Why Does Medi-Cal Care About My Settlement?

Two reasons. And they’re separate issues that people mix up constantly.

The lien (paying them back). Medi-Cal is what lawyers call a “payer of last resort.” If they covered your ambulance ride, your surgery, and your physical therapy after the accident, they have a legal right to get reimbursed from your settlement. This is called subrogation. They paid your bills. Now someone else (the person who hurt you) is paying. Medi-Cal wants its portion back.

Eligibility (keeping your coverage). The state also needs to know if your financial situation changed. A lump sum hitting your bank account could theoretically affect whether you still qualify for benefits.

Here’s where it gets interesting for Californians.

Did California Really Eliminate the Asset Limit?

Yes. And this is huge.

As of January 1, 2024, California became the first state to eliminate asset limits for all Medi-Cal programs. That old $2,000 cap you may have heard about? Gone. At least for Medi-Cal.

What this means: having money sitting in your bank account, including settlement money, does not automatically kick you off Medi-Cal anymore.

But wait. Income rules still apply.

The DHCS makes this clear. You still need to report income and property to your county office. The distinction between “assets” (money you have) and “income” (money coming in) matters here. Your settlement might be counted as income in the month you receive it.

Here’s some good news, though. Most adults on MAGI Medi-Cal (people 19-64) have eligibility based on taxable income. Physical injury settlements are generally non-taxable under IRS rules. So for many people, that settlement check won’t count as income at all for eligibility purposes.

This gets complicated fast. Talk to a lawyer before assuming anything.

How Can I Protect My Settlement and Keep My Benefits?

You have options. Real ones.

Special Needs Trusts. An SNT holds your settlement money in a way that doesn’t count against your eligibility. The DHCS specifically allows this for disabled beneficiaries who need to maintain public benefits while holding assets. The trust pays for things Medi-Cal doesn’t cover. You keep your healthcare.

The spend-down approach. Some attorneys recommend spending settlement funds on exempt purchases within the same month you receive them. Home modifications. A reliable vehicle. Paying off debt. These strategic expenditures can reduce countable resources while improving your actual life.

Negotiating the lien. Here’s something people don’t realize: Medi-Cal’s claim on your settlement is negotiable. California law says the director cannot recover more than you actually receive after attorney fees and costs. A good personal injury attorney doesn’t just accept whatever Medi-Cal says you owe. They push back. They negotiate it down. More money stays in your pocket.

What Happens If I Just Don’t Report It?

Bad things.

• Your benefits get terminated
• The state demands repayment for everything they covered
• You could face fraud charges

They will find out. County agencies cross-reference data. Insurance companies report settlements. Trying to hide money from the government is not a strategy. It’s a countdown to disaster.

One Critical Warning for SSI Recipients

If you receive SSI (Supplemental Security Income) alongside Medi-Cal, pay attention. While California eliminated Medi-Cal asset limits, the federal SSI program still enforces a $2,000 asset cap. A settlement could immediately disqualify you from SSI even though your Medi-Cal might be fine.

This is exactly why you need a lawyer who understands both programs.

You Fought for This Money. Protect It.

A settlement after an injury is meant to help you move forward—pay medical bills, cover lost wages, or adapt your home or car to your new needs.

What you don’t want is the state taking more than they’re entitled to because you didn’t know the rules.

A paperwork mistake shouldn’t cost you your healthcare or your compensation. If you’re navigating a settlement while on Medi-Cal, contact DK Law for a free consultation. We help clients structure settlements, so they keep their benefits and their money.