Yes, depending on what type of social security benefits you receive, your eligibility and benefit amounts may change if you receive a settlement or jury award from your personal injury case. If you receive Supplemental Security Income (SSI), a personal injury settlement may affect eligibility or benefits because this is a needs-based program. Qualifying for Medicaid is also usually tied to your eligibility for SSI. However, if you receive Social Security Disability Benefits (SSDI), receiving a personal injury award is unlikely to change your eligibility.
There are strategies that Maine personal injury lawyers can employ to help preserve most, if not all, of your settlement amount and maintain your SSI benefits. What’s possible for you depends on the type of damages you’re awarded and the type of benefits you receive.
How personal injury settlements affect SSI benefits
The Social Security Administration (SSA) considers lump sum settlements to be an increase in your financial resources. When you receive a lump sum settlement, it’s counted as an asset in the month you receive it, if the money is still in your bank account at the end of the month.
You can use your settlement sum to pay the medical bills from your accident, catch up on household bills if you are out of work due to your injuries, or make other purchases. As long as your assets are within SSI eligibility limits during the reporting period, then your benefits should be unaffected.
Unlike SSI benefits, SSDI is not a needs-based program. If you’ve been gainfully employed during your adult life and paid into the SSDI system, you can apply to receive benefits. These benefits are based on your level of disability and your ability to sustain gainful employment. The injuries from your personal injury claim itself may make you eligible to receive SSDI benefits.
Preserving Social Security benefits after receiving a personal injury award
Most personal injury settlements include money damages to compensate you for medical bills, lost wages, emotional distress, pain and suffering and permanent injury. This money isn’t intended to pay bills, but it is rightfully yours and is intended to provide you with the means to alleviate financial burdens and is for your and your family’s benefit.
There are a few strategies your personal injury lawyer can employ to ensure you benefit from the settlement and preserve your SSI.
Spend down the settlement
“Spending down” means using your settlement funds to purchase items or pay for services that aren’t considered assets per the SSA. This can include modifying your home or vehicle to accommodate a new disability, paying your medical bills, purchasing a new vehicle, or buying essential household goods.
Choose to receive structured payments instead of a lump sum
Receiving regular monthly payments, instead of the full amount in a lump sum may provide extra money for your household while keeping your assets under the maximum household income for SSI purposes. This type of settlement needs to be planned carefully with your lawyer before you sign a settlement agreement, and not all cases can be settled in this manner.
Create a Special Needs Trust
A Special Needs Trust (SNT) is designed to financially benefit an individual with a disability. They are specially designed so the beneficiary does not legally own the assets in the trust and does not exercise control over them. You can place your settlement in the SNT and use it for specific purchases, including future medical needs, in-home caregiver services, and essentials that your disability benefits don’t cover. Because you do not legally own or control the money in the trust, it isn’t counted as “yours” by the SSA.
Form a Medicare Set-Aside Account
A Medicare Set-Aside Account (MSA) pays for your future medical needs, including rehabilitative therapy, accommodations in a nursing home, future surgeries, and other care you may need for your accident-related injuries. It effectively separates your settlement funds from your personal assets.
Proactive planning and legal advice can help you keep your full settlement
If you currently receive SSI benefits, receiving a lump sum personal injury settlement may render you ineligible until your total income and assets fall back below the eligibility threshold. Tell your attorney early about any government benefits you receive so they can protect your eligibility before finalizing your settlement.
At Shaheen & Gordon, we have successfully secured high-value settlements for injured victims who also receive SSI benefits. Our experienced attorneys know how to create financial protections so you can continue to receive your benefits and have the means to rebuild your life after an injury. We offer a free consultation for new clients, which you can book by calling our offices at (800) 451-1002.
