If you were injured by someone, then you may be eligible for a personal injury settlement that will help you financially recover. The payment may include compensation for medical expenses, property damage, and lost earnings. Your settlement may also provide monetary compensation for things like psychological distress, pain and suffering, and diminished life enjoyment.
While it can not make up for the injuries you have suffered, a personal injury settlement can help you move forward. If your injuries prevent you from working, then your Social Security disability benefit may be impacted by a recovery for personal injury.
Social Security Disability has two types of benefits
Both SSDI and SSI provide income for individuals who cannot work due to a disability, but your benefits may be affected by your personal injury settlement if you are on SSI.
SSDI benefits are based upon your employment history and your disability. SSDI is not “needs based”. You are eligible for SSDI only if you have accumulated enough work credits. Because a personal injury settlement does not impact how many work credits you have and the SSDI payment is based upon the amount you paid in while you were working, receiving a personal injury settlement will not change the amount of SSDI payment you are paid.
Why? A personal injury settlement is considered a “one-time payment”and is not “gainful employment” (ie. performing work and being paid). If you were to take on a job and be paid for work, gainful employment income could show that you are able to work and may make you ineligible for SSDI. In the case of a personal injury settlement, even though you are receiving a payment, said payment was not related to any sort of work that you performed. The one-time settlement payments are intended to pay medical expenses, compensate for property damage, and provide you with a lifeline to help with other damages you incurred due to your accident.
If you are on Social Security disability of any kind (SSDI/SSI) there may be an impact on the lost wage portion of your personal injury case. This is because you may not be able to claim lost wages or lost earning potential. The at-fault party’s insurance company may use your pre-existing disability to argue that since you are on disability already there is no lost wage claim and defense counsel may even argue that your injuries and medical expenses were related to a pre-existing condition and were not a direct result of the accident.
SSI is a “needs based” disability resource meaning it helps provide you with an income source even though you did not work and pay into Social Security long enough to be “insured” for SSDI. When you apply for SSI you will need to prove your disability and an inability to work, as well as disclose your income and assets.
A personal injury settlement can push you over the SSI program’s asset limit, which is currently $2,000 for individuals and $3,000 for couples. If you exceed that limit, your benefits can be suspended. This resource limit includes assets such as cash, bank account balances, retirement savings, and any other financial accounts. SSI does not count certain property as an asset when determining the limit, which includes your home and land, one vehicle, or any household goods. If your assets are over $2,000 at the end of the month, you may become ineligible for SSI, Medicaid, and various other services.
A large personal injury settlement may push you over the SSI resource limit making you lose your SSI benefit. Because of this, SSI recipients are very careful about accepting assets without taking steps to protect themselves.
If you are receiving SSI and have been involved in an accident or personal injury incident where you are eligible for compensation, there may be ways to benefit from a personal injury settlement without losing your SSI benefits.
You may want to explore the use of a STABLE account to hold your personal injury funds.
SSI recipients sometimes use a Special Needs Trust. This is a legal tool that is designed to hold assets for a person with disabilities in a trust. You can use the assets in the trust for certain approved expenses. A third party oversees the trust. Because setting up the trust can be somewhat complicated, it is best to have an attorney who is familiar with both SSI and personal injury settlements to help you with this process.
Some personal injury settlement recipients who have large debts or significant upcoming expenses may opt to forfeit one month of benefits and “spend down” their settlement amount. This might include paying off a mortgage, car loan, credit card, or student loan, prepaying for funeral or burial expenses, taking care of major home repairs or remodeling, or paying other expenses or bills.
Once your resources are back under the limit, you may be able to get your SSI benefits reinstated or reapply for SSI. While this can be a great option for those who have significant debts or expenses, the disadvantage is that the personal injury settlement proceeds will be gone quickly.
Another option is to have your attorney help you structure your settlement where instead of a lump-sum payment, you receive smaller payments distributed over a longer period of time. Your attorney can work with you to come up with a monthly amount that will keep you under the threshold for SSI asset and income limits.
You do not have to forfeit your right to a personal injury settlement simply because you are receiving SSI benefits. With experienced guidance from a personal injury lawyer who has worked with cases like yours, you can make the right choices that will protect you and your future.
While it is always helpful to have an attorney to guide you through a personal injury settlement, it is imperative for those receiving benefits to choose an attorney who is familiar with Social Security law. Our team understands the intricacies of both personal injury and Social Security law and can help you make the right decision for your situation. Before you talk to the insurance company or accept a settlement, contact Arthur Law Firm right away (419) 782-9881 for a free consultation to protect yourself, your family, and your future.