How Will a Personal Injury Settlement Impact my Social Security Benefits?

It is difficult enough to have a debilitating injury in which you cannot work or only do limited work. Getting Social Security disability benefits helps, but the approval process is complicated and frustrating, and there are countless hoops that you have to jump through in order to start receiving benefits. On top of all this, getting injured in an accident adds another layer of complexity to the situation.

If the accident was someone else’s fault, you may be able to file a personal injury lawsuit against the responsible party. The problem of course is – you don’t want to do anything to jeopardize the disability benefits that you went through so much trouble to get approved for in the first place. A large monetary award to compensate you for your injuries is nice, but you depend on your Social Security disability benefits to make ends meet.

If you find yourself in this situation, be sure to speak with an experienced personal injury attorney who also has in-depth knowledge of the Social Security disability program. Not every personal injury lawyer out there handles disability claims, you need to work with someone that thoroughly understands both of these areas of the law and how the two intersect in cases like yours.

Will I Lose my Social Security Disability Benefits if I Recover a Personal Injury Settlement?

As with most legal questions, the answer always starts with – it depends on the unique circumstances of your case. With this question specifically, it depends largely on which program you are receiving your Social Security benefits under; SSDI or SSI.

If you are receiving benefits through the regular Social Security Disability insurance program (SSDI), then your personal injury settlement will generally not affect your benefits – even if you receive a large amount. There are a couple side issues that you should be aware of, however, which we will cover shortly.

If you are receiving benefits through the Supplemental Security Income (SSI) program, then it is possible that your benefits could be jeopardized by a personal injury settlement. There are some things you can do to address this issue, however, which we will also cover in a little while.

Personal Injury Settlements and SSDI

SSDI (or sometimes referred to as SSD) benefits are funded through the Social Security Trust Fund, and eligibility is determined based on the number of work credits that the disabled person has accumulated. If you have a qualifying disability and you have worked the required length of time and paid into the program through taxes, then you will qualify for benefits. Therefore, receiving a large monetary award does not impact your eligibility.

Now, there are a couple separate issues that you should be aware of as you prepare to pursue a personal injury claim. First of all, your settlement award will probably not be as much as a lot of people with the same type of injury as you because you are not working or only doing a limited amount of work. Those who are working full-time when they get injured can usually collect compensation for lost wages and lost future earning capacity, but these damages may not be available in your case if you were receiving SSDI benefits when the accident occurred.

Another thing to keep in mind is that the defendant (in your personal injury case) is likely to bring up the fact that you have a pre-existing health condition (the one you are collecting benefits for) as a way of undermining your claim. They might try to argue that your injuries would not have been as bad if you did not already have a health condition, which could result in a lower award.

To effectively address this possibility, be sure to seek immediate medical attention after your accident, keep all of your subsequent appointments, and follow the advice of your doctor and attorney. As long as you got treated for your injuries right away and fully document everything, you should be able to minimize the effectiveness of the defendant’s argument.

Personal Injury Settlements and SSI

Supplemental Security Income (SSI) is a separate program that is funded by general tax revenues rather than through Social Security taxes. This is a needs-based program in which qualification does not depend on work credits, but rather on the income and assets of the recipient.

If you were to receive a fairly significant personal injury settlement, it could put you over the asset threshold that is necessary to qualify for SSI benefits. This could mean the suspension of your benefits, which would be catastrophic.

It is unfair to have to choose between receiving the full and fair compensation you deserve for an injury you sustained through no fault of your own and receiving the monthly benefits you need to survive. But unfortunately, this is how the program is set up.

Thankfully, there are some ways to protect your SSI benefits and still receive your personal injury settlement. One possibility is to do a “spend down”, which means spending enough of the settlement funds on exempt resources and that the items purchased are solely for the benefit of the disabled recipient to put you back under the allowable threshold.

You could use the funds to pay off your home mortgage, make modifications to your home to help accommodate your disabilities, pay off your existing debts, or a number of other things. The problem of course is that once you have spent the money, you no longer have it available for future emergencies and other important expenses that may come up.

Another possibility is to set up a special needs trust (SNT). With this option, the proceeds from the settlement are placed directly into the trust without affecting your SSI benefits. The funds within the trust can be used for expenditures that are not covered by SSI, such as transportation, certain therapies, and nursing care.

Contact Caroselli, Beachler & Coleman for Further Help with Social Security Benefits and Personal Injury Claims

If you are receiving Social Security benefits and you got hurt through no fault of your own, you should not have to choose between keeping your benefits and obtaining the just compensation you deserve. At Caroselli, Beachler & Coleman, we understand the dilemma you are facing, and we are here to help you successfully navigate the complexities of these two areas of the law.

For a free consultation with one of our attorneys, message us online or call our office today at 412-391-9860 or toll-free at 866-466-5789. We look forward to serving you!