Car accidents, slipping and falling, and medical malpractice can cause serious injuries. When it’s someone else’s fault, the injured party deserves compensation. But some victims might skip seeking a settlement, thinking it will jeopardize their disability income. This can be a costly mistake: They might miss out on collecting money that can help pay their bills—and is rightfully theirs. And, the settlement might not change their benefits at all.
If a person is disabled, they might be collecting benefits in the form of SSDI (Social Security Disability Insurance) or SSI (Supplemental Security Income). These two government programs are sometimes confused. The rules are different for each of them, and so too how they are impacted by a personal injury settlement. After an accident, it’s a good idea to consult a personal injury lawyer to find the best course of action to safeguard your financial future.
A Personal Injury Settlement Seldom Affects SSDI
When taxes are withheld from workers’ paychecks, part of the money goes to FICA. FICA stands for Federal Insurance Contributions Act. These funds make up SSDI, or Social Security Disability Insurance, which is paid out to people who become disabled and can no longer work. A person’s contributions might also fund payments to their spouse or children.
To qualify for SSDI benefits, a person must be unable to work due to a disability that lasts more than a year. Short-term disability plans sponsored by employers are meant to take care of employees if a condition is expected to keep them off work for less than a year.
As an employee, paying into the fund through FICA payroll deductions earn employee “credits” that determine how much they are entitled to receive each month. Much like any insurance policy, the payroll deductions are the “premiums” paid by the employee. (Some money is collected from employers for FICA too.) If the employee becomes disabled and needs them, the monthly SSDI payments are the “proceeds” of the policy.
It is not a “needs-based” plan. As long as someone has contributed to social security, they can get this benefit. The recipient does not need to show they are financially needy, only that they are disabled.
Personal Injury Settlements Can Greatly Affect SSI
SSI, or Supplemental Security Income, on the other hand, is a federally funded program that provides assistance to low-income disabled, blind, or aged individuals. It is a “needs-based” benefit that is funded by general tax revenue but has nothing to do with the person’s prior work history or tax contributions.
To qualify for this disability benefit, a person must be 65 years or older, totally or partially blind, or disabled. Qualifying disabilities include medical conditions that make it impossible to work for at least a year or are expected to result in death. Payments are meant to provide money for basic needs such as food and shelter.
Applicants must also prove that they need SSI benefits by disclosing their financial information and passing an “asset test.” The benefit is for people who meet certain poverty requirements, so if a person has some source of income or owns a sufficient amount of assets, they can be disqualified.
Disability Benefits and Personal Injury Settlements
If the victim of an accident gets compensation from the at-fault party in the form of a personal injury settlement, the impact on their disability benefits will depend on if they’re collecting SSDI or SSI. Settlements have no impact on SSDI benefits. As long as the person paid into the fund while they were working, and they are disabled, they are entitled to receive the same amount as always. Even if they are awarded a huge amount of damages, nothing about their SSDI payments will change.
However, because SSI payment are needs-based, they will be affected by a settlement. A cash payout from a personal injury claim or lawsuit would need to be reported to the Social Security Administration. If the amount pushes them over the acceptable asset amount, their payments could be lowered or eliminated completely. Even an award as small as $2000 (or $3000 for married people) might disqualify someone from receiving SSI benefits.
Safeguarding Social Security Payments
SSDI payments are safe no matter how large a personal injury settlement someone might get. There is also a way that a victim can collect an award and continue to get their SSI benefit. The proceeds from a personal injury suit can be placed into a Special Needs Trust.
A Special Needs Trust sets aside funds that the injured person can use for their recovery and other things, while still collecting their government benefits. A personal injury lawyer can give advice about setting up the settlement for the best financial outcome.
Seeking Personal Injury Damages
People who are already receiving government disability benefits should not rule out seeking a personal injury settlement. Losses can add up after an accident, and compensation can help pay for a number of things that the victim can’t otherwise afford such as:
- Car repairs
- Emergency medical care
- Hospital bills
- Doctor’s fees
- Medical equipment
- Ongoing physical therapy or rehabilitation
- Household services
- Lost wages
- Lost future earnings
- Pain and suffering
SSDI payments are safe, no matter what the outcome. They have nothing to lose by filing a claim for compensation.
A victim receiving SSI payments, however, could see their benefit reduced or go away if they receive a personal injury settlement. They will need to calculate their possible payout from a settlement—and how long it will last—compared to their monthly SSI payment. An experienced personal injury lawyer can help weigh the pros and cons of filing a lawsuit to seek damages.
Keeping Disability Benefits Despite a Personal Injury Settlement
After an accident, recovering from personal injuries should be the top priority. Unfortunately, worrying about how to afford it can distract victims from getting better. And for some people, there is the added fear that a settlement will affect their disability benefits.
Rest assured that a personal injury settlement will not have any impact on Social Security Disability Insurance benefits. Anyone who pays into the system through payroll deductions is eligible to collect payments if they are disabled. They are entitled to that money and will continue to receive it no matter how much they might win in personal injury compensation.
Even recipients of Supplemental Security Income may be able to continue getting benefits. An attorney can help them structure the settlement for the best possible outcome.
If you are the victim of an accident, contact the personal injury lawyers at Hipskind & McAninch. They can help you navigate the complicated system of government benefits, and make sure you get a fair settlement for your injuries.