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2 things may come up:
1. There might be Medicare Secondary Payer Act issue that could be a problem for your dad. The Medicare Secondary Payer Act (MSP), is about Medicare being reimbursed for any payments they made for medical expenses for a Medicare covered individual in which another individual, business or other entity was later found responsible for and made a financial settlement to the Medicare covered individual. If Medicare paid for ANY of his care, then Medicare is due to be reimbursed for their costs paid for dad's care from the settlement. Understand?

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2. If the $ is tied to his SS# or his spouse's SS#, then it could show up as income. Dad may not realize that until he gets the tax form in Jan or Feb of the next year. So say Dad got 50K from a lawsuit yesterday from ABC insurance, then ABC will sent dad a 1099 - MISC income statement in Jan, 2014 of 50K to be reported for 2013 income taxes. This information will probably eventually come up & surface for Medicaid and he will get a penalty in which he will still be on Medicaid BUT ineligible for Medicaid to pay for his care until those funds are spent. I don't know if all states do this, but my mom is in a NH in TX and on Medicaid. Every year I get a form about 6 weeks after her anniversary date of being accepted into Medicaid. In the form (like 8 pages) you have to update all their financial & personal info and provide the last 4 months of bank statement AND disclose if they received any additional money from other sources (inheritance, insurance, etc) and done within 10 days of the state's mailing. Form has to be signed and if you do not disclose stuff and clearly know about it, the is a penalty for the signer as well as for the Medicaid recipient.

For your dad, what the medical charges total, what Medicare paid for and what the settlement paid to him is critical to determine how much everyone gets, this is why you need to see the attorney who handled the claim or lawsuit. It may be that the attorney will need to set up a trust account (kinda like how earnest $ is held when you buy a house) that the $ in the settlement goes to; and from that $ due to Medicare comes from and is not released to your dad until Medicare sends her attorney a letter that the reimbursement is settled in full and then the balance released to her. If an attorney wasn’t involved (like if was a product liability claim and dad filled out a form), then you would need to contact MSP compliance dept of the insurance company.

I would suggest that you very carefully speak with the attorney who did the lawsuit or claim against whomever you got the settlement $$ from to see what if any options are available for the settlement without future issues from Medicaid.

You do realize that if dad is on Medicaid and has his home, that Medicaid is required to look into estate recovery for the costs Medicaid paid for dad. While dad is alive the house is an exempt asset, but once he dies, the house looses that status and can have a MERP (Medicaid estate recovery program) claim or lein placed on the house. So paying off the mortgage may not be the best idea if family will have a MERP claim on the property. Really it's alot of stuff to evaluate & your state's law on death /probate will make a huge difference. You really need to speak with an attorney before you do something that could be costly. Good Luck
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can a cash reward from a settlement be used for paying your mortgage and not affect your medicade
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have no other question
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