Personal injury settlement how will this affect disability?

Recently on our legal forum a user asked, “I have been receiving disability benefits for five years. I was recently in a car accident. The case is about to be settled out of court. I am wondering whether the personal injury settlement will affect my disability benefits? While I need the injury payment, I need my monthly ongoing disability benefits more.”

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Overview of disability benefits

You did not mention what type of benefits you are receiving. Unfortunately, that detail is critical to understanding how your benefits could be affected by an injury settlement. With that in mind, let’s take a look at both disability benefits offered by the Social Security Administration (SSA) and what you need to know.

Social Security Disability Insurance overview

Social Security Disability Insurance (SSDI) is offered to workers who have a severe health condition and are not able to work for at least 12 continuous months. To qualify for benefits, workers must have also worked and paid taxes and be considered “insured” for benefits.

SSDI disability payments vary by recipient and are based on the worker’s average earnings and how much they paid in taxes. Claimants can also qualify for SSDI regardless of other sources of income or whether their spouse has a high income, assuming they meet the medical and nonmedical requirements for SSDI.

Supplemental Security Income (SSI) overview

SSI benefits are paid to the disabled, aged, and blind who are not able to work for at least 12 continuous months and who meet strict income and resource limits. Claimant do not have to have a work history or paid any taxes to qualify for SSI benefits. SSI benefits amounts are established by the federal government and are the same for all recipients (some claimants may receive a higher SSI payment if they live in states which offer a state supplemental payment in addition to the federal benefit).

How will the personal injury settlement affect my SSI payment?

Now, you asked how your personal injury settlement would affect your disability benefits. The answer is it depends on whether you are receiving SSI benefits or SSDI benefits.

If you are receiving SSDI benefits then the personal injury settlement will have no impact on your disability benefits.

If, however, you are receiving SSI benefits than the personal injury settlement could be considered income in the month you receive the payment and then could be considered a “resource” until the money is spent.

How can I avoid having the injury settlement affect my SSI payment?

The good news is there are steps you can take to avoid having the SSI payment count against you. The best thing to do is to talk to a trust attorney and discuss the option of placing the SSI settlement into a Special Needs Trust. Unfortunately, you will need to understand the proper way to establish the trust and the rules you need to follow to allocate the funds for the proper purposes.

Bottom Line:

A personal injury settlement can jeopardize your right to SSI disability benefits unless the funds are properly allocated to a Special Needs Trust.

Recent blog:

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beth

Beth L. is a content writer for Disability Benefits Home. Good content and information is one of many methods we utilize to bring you the answers you need.