If you currently receive needs-based benefits and have immediate plans for your settlement, you might ask your government caseworker about spending down your award and/or exemption planning. These can be helpful ways of handling small settlements.
Sometimes people use their settlement proceeds to pay down existing debt (like credit cards or utility bills). If you don’t have debt, you might ask your gas and electric companies to allow you to pre-pay your utility bills, perhaps several months in advance. If you do this, it needs to happen the same month in which you receive your settlement check. Be sure to talk to your government caseworker about your particular situation. This person will be best equipped to provide the exact guidelines for your benefit program.
If you currently receive needs-based benefits and you plan to use your settlement to buy major items such as a home or a car, you might consider talking with your government caseworker about what’s called exemption planning. Exemption planning is the process of spending your proceeds the same month that you receive your check on items that don’t affect your benefit eligibility. Certain items, such as your home, a reasonably-priced car, and a limited amount of home furnishings don’t count toward your eligibility, so you may be able to use your settlement proceeds to purchase them.
Timing is critical. In order to ensure you don’t lose your benefits for even a short period of time, it is best if you have a plan for spending down or using exemption planning before receiving your settlement check. You should speak with your caseworker about your particular situation and your eligibility for spending down or exemption planning.