Yes, if your Social Security benefits are financially needs-based (SSI and Medicaid), then your personal injury settlement could result in a loss of SSI benefits or loss of Medicaid coverage. The money you receive in a personal injury settlement affects your financial eligibility by increasing your monthly income and assets in the month you receive the personal injury settlement funds. You may be ineligible for a need-based program until you financially requalify.
While a personal injury award can affect SSI eligibility, it likely won’t impact any Social Security Disability benefits (SSDI) you receive, as this program’s benefits are based on your level of disability. However, if you do participate in one of these programs, or if you need to apply for Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) because the accident has rendered you unable to sustain gainful employment, it’s essential to consult an experienced personal injury attorney as soon as possible. They advise you of legal solutions to avoid loss of benefits and keep your settlement money.
How your personal injury settlement affects your Social Security benefits
The Social Security Administration (SSA) considers any money you receive from a personal injury settlement to be an increase in your financial resources. This affects SSI benefits, which are calculated on your financial needs, but not necessarily SSDI benefits. SSDI is an earned program through tax contributions, and is available if you become disabled and unable to work. However, you may need to coordinate your disability benefits, especially if your personal injury settlement includes compensation for lost wages; this award could impact your monthly SSDI amount.
Your SSI benefits and Medicaid eligibility are based on your monthly income and total assets. Receiving a lump sum settlement will render you ineligible in the month you receive it, unless you employ one of these legal strategies to preserve your benefits and award.
Establish a Special Needs Trust
You can place your settlement funds into a Special Needs Trust (SNT), a trust specifically constructed to provide for the needs of a person with disabilities or special needs. The beneficiary (you) is not in control of the trust, even if you created it, and therefore any assets or money in the trust aren’t legally yours, so it’s not considered your personal asset by the SSA.
Create a Medicare Set-Aside Account
Deposit your settlement money in a Medicare Set-Aside Account (MSA), which can be used to pay for future medical care. If you were severely injured or require ongoing in-home personal and medical care, the money in your MSA can be used to pay for that, and you’ll still be financially eligible for Medicaid benefits.
Spend down the personal injury award
“Spending down” is the process by which you spend your settlement money the month you receive it, so it’s not calculated as income or assets. You can pay any outstanding medical bills from the account, make modifications to your house if you’re now disabled, and pay for durable medical equipment and other necessary household goods to help you remain independent.
Choose a structured settlement
A structured settlement is paid out over time, in set monthly installments. Plan this carefully; you may be able to spread out payments and still keep your monthly income below the eligibility cap for SSI and Medicaid. Not every personal injury settlement is eligible for this type of payout; discuss your options with your personal injury lawyer before settlement negotiations begin.
Contact us today for help preserving your benefits
For help litigating your personal injury case and preserving your Social Security benefits, contact Langdon & Emison at (866) 931-2115. Our attorneys can explain your legal options in a free consultation.