Will a Personal Injury Settlement Affect My Social Security Disability Benefits?

Suppose you are receiving social security disability benefits and are about to file a personal injury claim or obtain a personal injury settlement. In that case, you may wonder how personal injury settlements affect disability benefits. It is natural to have these concerns, especially if you rely on your monthly disability payments to cover basic living expenses. So, will a personal injury settlement affect your social security disability benefits? The answer to this question depends on what benefits you receive. An injury settlement does not affect SSDI benefits. On the other hand, SSI benefits may be negatively affected by a personal injury settlement. Read on to learn more!

Differentiating Between SSDI and SSI

The first step towards understanding whether and how a personal injury settlement will affect your social security disability benefits is identifying the type of benefits you are receiving. Are you receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI)? You earn SSDI benefits based on your work history. More specifically, you qualify for these benefits if you have earned enough “work credits” in the last five or ten years. Work credits are earned by paying Social Security taxes. On the other hand, SSI is a needs-based program for individuals who are blind, disabled, or 65 years or older with limited income and resources. SSI is not based on whether you’ve paid into the system or earned work credits.

How a Personal Injury Settlement Affects SSDI Benefits

If you receive SSDI benefits, you generally will not experience any reduction in amounts even if you receive an injury settlement. This is true whether you receive a lump sum payment or monthly payments. SSDI benefits are not affected by a personal injury settlement because these are earned benefits based on your work history and contributions to the Social Security system. SSDI is not a needs-based program. Eligibility for SSDI is not determined by your current financial situation, but rather by having a qualifying disability and sufficient work credits.

However, it’s vital to note that if you receive workers’ compensation benefits in addition to SSDI, the workers’ compensation offset rule might reduce your SSDI benefits. Generally, the combined benefits cannot exceed 80% of your average earnings before you were disabled. If they exceed, the surplus will be deducted from SSDI benefits.

How a Personal Injury Settlement Affects SSI Benefits

If you are receiving SSI benefits, a personal injury settlement can reduce or eliminate your eligibility for benefits. SSI benefits are needs-based. You qualify for these benefits by showing that you have asset or income limitations. Since a personal injury settlement increases your financial resources, a settlement will likely reduce your SSI payments. If a personal injury settlement leads to your assets surpassing the federal limits of the program, your benefits could be suspended or terminated.

Fortunately, there are several ways to protect your SSI benefits in the event that you receive a personal injury settlement. They include the following;

• Creating a Special Needs Trust (SNT)
• Spending down strategically

A qualified attorney who understands the Social Security system can help you properly structure your personal injury settlement to avoid unintended consequences.

Contact a London Social Security Disability Lawyer

Our skilled London and Southeast Kentucky Social Security disability attorneys at Cessna & George Law Firm can help you safeguard your benefits and maximize your personal injury settlement. Contact us today.

Source:

ssa.gov/policy/docs/ssb/v65n4/v65n4p3.html#:~:text=and%20Spieler%202001).-,The%20Offsets,-An%20offset%20for