Managing Personal Injury Settlements: How a Settlement Could Affect Social Security Disability Benefits
If you are injured in an auto accident and receiving social security benefits, then you need to understand how a personal injury settlement can impact your benefits.
There are two types are two Supplemental Security Administration programs for disability: Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI). Here we will explore the intersection of personal injury settlements and disability benefits.
How a Settlement Can Affect SSI Benefits
Resource Limits: SSI is needs-based, which means in order to qualify for SSI benefits your financial resources are considered when determining eligibility. A personal injury settlement’s size may push total countable resources above the SSI resource limit. As of the last update in September 2021, the resource limit was $2,000.00 for an individual and $3,000.00 for a couple. Resources include cash, real estate, and other assets.
Income Impact: SSI mainly focuses on income. A lump-sum settlement can count as income in the month of receipt, potentially reducing or suspending SSI benefits. The amount of the reduction depends on the settlement’s size and its designation for specific needs, such as medical expenses or housing modifications.
Medicaid Eligibility: Most SSI recipients qualify for Medicaid, offering essential healthcare coverage. A substantial settlement could result in Medicaid benefits loss, necessitating affordable healthcare alternatives.
Strategies to Protect SSI Benefits
Structured Settlement: Structuring a settlement involves spreading payments over time, reducing monthly countable income, and helping maintain SSI eligibility.
Special Needs Trusts (SNTs): SNTs safeguard settlement funds in a trust managed by a trustee for your benefit. These assets typically do not count toward the SSI resource limit, ensuring ongoing eligibility while adhering to trust fund usage regulations.
Exempt Expenses: Certain expenses, like housing or vehicle modifications, and disability-related medical bills, can be excluded from income calculations. Carefully document these expenses to ensure their proper exclusion.
How a Settlement Can Affect SSDI Benefits
SSDI benefits are based on work history and disability severity, not income or resources. In general, personal injury settlements do not impact SSDI benefits. However, exceeding the Substantial Gainful Activity (SGA) limit with settlement income can affect SSDI benefits.
Strategies to Protect SSDI Benefits
SGA Limit Awareness: Make sure to stay informed about the SGA limit. As of September 2021, the SGA limit was $1,310 per month for non-blind individuals. Ensure your settlement income does not surpass this threshold to safeguard your SSDI benefits.
Professional Guidance: Consult experienced professionals, such as personal injury attorneys and financial advisors specializing in disability benefits and settlements, to structure settlements effectively to minimize SSDI benefit impacts.
Consult with a Personal Injury Attorney
Balancing personal injury settlements with SSI and SSDI benefits necessitates thoughtful planning. While settlements can affect SSI due to resource and income limits, strategies like structured settlements, Special Needs Trusts (SNTs), and exempt expense documentation can help safeguard these vital benefits. SSDI benefits are generally unaffected by settlements, if you stay within SGA limits. Seek expert advice to make informed decisions and maximize your financial support while ensuring compliance with current guidelines and regulations.
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