Yes, if you receive benefits from the Social Security Administration (SSA), your personal injury settlement funds could affect whether you still get benefits or lower the amount you receive each month. Whether receiving a personal injury settlement affects SSI depends on which type of benefits you receive.
If you plan to apply for Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) and you have a personal injury settlement in your bank account, if you get a structured settlement payout monthly, or if you anticipate receiving a settlement or jury award soon, then your application for benefits could be denied.
Depending on the amount of your settlement and how you receive the payments, it could be considered income and assets by the SSA, potentially resulting in a loss of SSI benefits. If you receive SSI benefits and have a pending personal injury case, it’s crucial to consult your Independence personal injury lawyer immediately—before receiving your money—so they can assist you in placing those funds into a special account, thereby protecting your SSI eligibility.
How a personal injury award affects your Medicaid and SSI benefits
Supplemental Security Income (SSI) and Medicaid are both needs-based programs, so any change to your monthly income or total calculable assets could affect SSI benefits and Medicaid eligibility. If you receive the settlement as a lump sum, the SSA counts it as an increase in your financial resources in the month you receive it, so your eligibility could be affected if any of that money remains in your account at month’s end.
However, if you plan to use your settlement money to pay off your medical bills and other accident-related expenses in the same month you receive the award, it won’t be counted against the eligibility threshold, and your benefits should remain unaffected.
Medicaid is also a needs-based program; if you rely on Medicaid for your health insurance coverage, you could lose coverage until your monthly income and allowed assets fall back under the allowed amount.
How your settlement affects social security disability benefits
Social Security Disability Income (SSDI) isn’t financially needs-based. It’s an “earned benefit” based on your past work history and contributions to the Social Security system, not your current income or assets. In fact, you’re not even required to report the settlement to the SSA if you only receive SSDI benefits. However, if the injury that initiated the personal injury case changed your ability to work, then you may need to work with the SSA to adjust your SSDI benefits.
How to keep your SSA benefits after receiving a personal injury settlement
You may have received more money in the settlement than you need to cover your outstanding medical bills. Many settlements include money for lost wages and loss of earning potential (if you become disabled and cannot continue working), so part of the money may be earmarked to cover your monthly expenses while you’re out of work.
Many settlements also include damages for pain and suffering and other non-material losses. This money isn’t intended to pay bills, but rather to compensate you for your loss of quality of life.
The money is yours, and any extra that isn’t necessary to cover your medical treatment and other needs is for you and your family, to give you the means to rebuild your life and move toward a positive future. There are a few strategies you can discuss with your lawyer to help you keep your money and benefits.
Spend down the settlement
“Spending down” is the process of spending your settlement lump sum or monthly payout to purchase services (like in-home personal or medical care) and items (like a replacement vehicle or modifications to your house) that won’t be considered assets by the SSA.
Create a Special Needs Trust
A Special Needs Trust (SNT) is structured so that the creator (you) is not in control of the trust and its assets, and therefore does not legally own them. Any monies in an SNT can be used for goods and services that Medicaid and other government benefits don’t cover, so you benefit financially from the trust without being directly in control of its assets. An SNT may only be used to pay for approved expenses, such as non-Medicaid-covered medical care, physical therapy, or in-home caregiving services.
Open a Medicare Set-Aside Account
A Medicare Set-Aside Account (MSA) protects your benefits by separating settlement funds into an account for future medical needs, ensuring this money is not counted toward your Medicaid or Medicare eligibility.
Talk to a lawyer before accepting a settlement
Receiving a personal injury settlement while enrolled in a benefits program can put your eligibility at risk. But with the right legal guidance, you can protect both your recovery and your future.
Are you currently enrolled in a benefits program from the SSA and need help with your personal injury claim? It’s essential to consult an experienced attorney about your options. We can help you. Contact Langdon & Emison today at (866) 931-2115 or contact us online for a free consultation.
