Does a Personal Injury Settlement Affect SSD Benefits?
If you’ve recently received a personal injury settlement, you’re probably wondering how it will affect your Social Security Disability benefits (SSD benefits). The good news is that a personal injury award will not affect your disability benefits.
However, if you’re also receiving Supplemental Security Income (SSI) benefits, you may see those benefits reduced or denied entirely. Additionally, if you received a lump sum settlement award from a worker’s compensation claim, that also reduces your disability benefits.
Understanding what will affect your Social Security benefits, what won’t, and what to do if your benefits are reduced or terminated can be complicated. An experienced disability benefits lawyer can help you protect your benefits or file an appeal if they are reduced or terminated.
How a Personal Injury Settlement Affects SSD Benefits
The Social Security Administration handles both SSI and SSDI benefits, although there are different qualifications and rules for maintaining each. If you were hurt through the negligent actions of another, you may be receiving disability benefits because you can’t work due to your injury.
Many people in these situations also file a personal injury suit against the party that caused their injury; if you do this and win your case, you’ll receive compensatory damages. This award may affect your benefits status, but that depends on which program you receive benefits through.
Social Security Disability Benefits
In most cases, someone receiving SSDI benefits won’t have their eligibility impacted by the personal injury settlement. SSDI benefits are based on your employment history (and how much you contributed to Social Security through your SS taxes) rather than your financial situation.
If you accumulated enough work credits and have a qualifying disability, you’re eligible to receive benefits — essentially, you’re receiving what you’ve already paid for through your taxes.
Supplemental Security Income
SSI benefits eligibility, on the other hand, will be affected by a personal injury settlement because these benefits are based on financial need rather than work credits. Qualifications for this program include a cap on your monthly income and assets, and to keep your benefits, you must maintain eligibility.
A large settlement will increase your financial resources, especially if you take it as a lump sum. However, even a structured settlement with monthly payments will affect your benefit amount, as that monthly allotment is viewed as income by the SSA.
Protecting Your SSI Benefits After a Personal Injury Award
Although a lump payout of your personal injury settlement award is likely to affect your SSI benefits, there are a few steps you and your disability and benefits lawyer can take to keep your benefits and the settlement you’re entitled to.
Spend Down Program
“Spend down” refers to a program allowing benefits recipients to spend the difference between their monthly income and the threshold for benefits eligibility on certain exempt resources (such as medical care and treatment) until they reach the eligibility cap. Some common qualifying purchases and expenditures for spend down include:
- Modifying your home or vehicle to accommodate your disability
- Paying off your home mortgage
- Paying off other debt, like credit cards or student loans
- Prepaying your funeral expenses
- Establishing a special needs trust (SNT) for your future expenses
A special needs trust is a special type of trust intended to help people with a qualifying disability retain their benefits. The trust isn’t controlled by the beneficiary (you), but its monies can be used to enhance your quality of life. Your settlement funds may be deposited in the trust so they don’t impact your SSI eligibility.
How Worker’s Compensation Settlements Affect Disability Benefits
If you were hurt on the job and are entitled to a workers’ compensation settlement, you may also be able to collect SSDI for your injury. You’re entitled to compensation from your employer’s workers’ compensation insurance and the SSDI benefits for your disability.
However, the SSA prohibits people eligible for both SSDI and workers’ comp from receiving the maximum amount of each benefit simultaneously, regardless of how they receive the workers’ compensation settlement (lump sum or payments). The cap for benefits is 80% of your average earnings before your injury (combining both types of benefits).
If the total amount of your benefits will exceed 80% of your pre-injury earnings, then the excess amount will be deducted from your SSDI allotment. This is called a benefits offset.
There are a few ways to minimize the offset amount and keep as much of the benefits you’re entitled to as possible. A Social Security Disability benefits attorney can help you explore your legal options.
Do You Need Help Getting the Benefits You’re Entitled To?
If you’ve received a settlement for a personal injury or workers’ compensation claim and are having trouble getting your full allotment from Social Security, we can help. Fill out our online form or give us a call to speak with a qualified disability benefits lawyer about your claim.