Will a personal injury settlement affect my Social Security Disability Insurance (SSDI) benefits? Should I apply for disability benefits with a personal injury lawsuit pending? Does a lump sum payment for my injury impact my disability claim?
The impact of a personal injury lawsuit on Social Security benefits depends on the type of benefit you are receiving. There are two types of benefits we will discuss: SSDI and SSI. The short answer is:
Personal injury claims do not affect SSDI benefits; however, they generally do affect SSI benefits. This article aims to shed light on how a personal injury case can impact different types of Social Security benefit claims.
Will a Settlement Affect Disability Benefits?
Whether you receive SSDI benefits or not, you can pursue disability benefits and personal injury damages simultaneously. This is because SSDI is an “earned benefit” program based on your work history and not a “needs-based” program.
An individual must pay taxes into the Social Security system for a required number of years to qualify for benefits. The Social Security Administration (SSA) will determine the benefit amount based on their contributions to the Social Security system.
In most cases, a personal injury settlement will not directly affect your SSDI benefits. A settlement should not change your Medicare benefits either. However, SSI eligibility is a different story.
The SSI Connection
While discussing SSDI, it’s crucial not to confuse it with Supplemental Security Income (SSI). SSI is a “needs-based” program providing financial assistance to elderly, blind, or disabled individuals with limited income and resources. The monthly maximum Federal amounts for a person who receives benefits for 2023 are:
- $914 for an eligible person
- $1,371 for an eligible person with an eligible spouse, and
- $458 for an essential person. (An SSI “essential person” is someone who lives with an SSI recipient and provides essential care.)
If you receive SSI payments, a personal injury settlement might make you ineligible for SSI. This is because SSI takes into account income and resources. The SSA might reduce or terminate your benefits if your assets (including your settlement) exceed the resource limit. Your settlement will also put your Medicaid benefits at risk.
Protecting Your Interests
If you are concerned about how a personal injury settlement might impact your Social Security benefits, consider the following steps:
- Seek the advice of an attorney who is knowledgeable in both personal injury and Social Security. They can guide you on structuring your settlement to minimize any potential impact on your benefits.
- You can establish a Special Needs Trust to hold the settlement funds if you’re receiving SSI. These trusts protect claimant’s eligibility for public benefits.
- Maintain records of your settlement, how funds are used, and your correspondence with the SSA. This can prove invaluable if questions arise later about the relationship between your settlement and your SSDI benefits.
A personal injury settlement does not generally impact SSDI benefits, but it does impact SSI benefits. By staying informed and seeking expert counsel, individuals can ensure they are maximizing their financial wellbeing while preserving essential benefits.