The Social Security Administration has various ways of looking at personal injury settlements. When it comes to Social Security Disability Income (SSDI), your eligibility for benefits should not change. Your SSDI and Medicare benefits are not affected by your income but by your work history. However, income-based programs such as Supplemental Security Income (SSI) and Medicaid may be affected by a settlement and if you receive personal injury legal funding.
Injury settlements or court awards are not considered additional wages by the Social Security Administration. The exception would be if an award settlement, or part of it, compensates for your lost wages. The Administration would consider that portion and additional damages such as punitive or exemplary damages as income. Keep reading to learn more about the relationship between settlements and disability benefits and the steps you can take to protect them.
Understanding Disability Benefits and Settlements
The way a personal injury settlement affects your disability benefits varies by program eligibility. Programs that base eligibility on your personal assets are more likely to be affected. See below how a settlement can affect your SSD, SSI, or VA benefits.
How Settlements Affect Social Security Disability (SSD/SSDI)
A settlement will not affect your Social Security Disability, as this program is an entitlement benefit. It is not dependent on your income and instead provides financial aid to those classified as disabled and have contributed to the Social Security trust fund. Recieval of a settlement will not change your eligibility or affect the amount you receive.
How Settlements Affect Supplemental Security Income (SSI)
A personal injury or worker’s compensation settlement can affect your Supplemental Security Income as it’s considered a needs-based government benefit. This program’s purpose is to provide financial aid to low-income disabled individuals. You have to meet an asset test to qualify for this program, so if a lump sum settlement puts you over the asset limit, you will likely see a disruption in your disability benefits.
How Settlements Affect Veteran Affairs Disability Benefit (VA)
Even though the VA doesn’t consider a settlement as income, receiving a settlement for a claim related to your military service can affect your veteran disability compensation. As you receive funds for the same issue you’re receiving VA benefits for, they can see it as a form of double payment.
How To Deal With SSI Eligibility
If you receive any compensation for income, it may lead to a reduction or termination of your benefits. However, you can maintain your eligibility by passing an asset test. The test factors in all the income and payments you receive (including lawsuit settlements). There is a set dollar amount you can earn. Anything over that, and you won’t be eligible for SSI, meaning you won’t receive benefits if the settlement pushes you above the limit. The same is true with SNAP Food Assistance and Subsidized Housing.
Protecting Your Disability Benefits After a Settlement
Losing government benefits can be devastating for someone with a disability, but winning a personal injury settlement does not have to mean losing all your benefits. You can set up a special needs trust. By putting the settlement proceeds into the trust, you can possibly maintain eligibility for benefits. The trust and your much-needed SSI benefits can pay for your healthcare costs and are available to meet all your daily needs.
Will My Benefits Affect My Settlement?
A settlement will not likely impact your disability benefits, especially if it’s related to an injury or illness caused by a third party’s negligence. On the other hand, your benefits can limit the settlement terms. It can’t include lost wages if you receive SSDI. Settlement amounts tend to be much less if they don’t consider lost wages.
Regardless, you must report the settlement amount to the Social Security Administration within ten days of receipt. The government may then reduce your Medicaid benefits or request a reimbursement for previously paid benefits.
Contact FCA for Legal Funding in Los Angeles
In most cases, a personal injury lawsuit is the way to go if you need compensation to cover loss of work, medical costs, and damages for pain and suffering. However, we understand the concern that legal funding in Los Angeles and any potential settlement may affect existing benefits. At Fund Capital America, we don’t check your income or credit to determine your eligibility for lawsuit funding.
Contact our team to discuss whether your California legal funding may impact SSI or SSDI eligibility. Call us at (855) 870-2274 for a thorough consultation, or submit a free online application to have us review your case. We’ll help you understand the impact of the settlement and the steps you can take to protect your benefits.
Frequently Asked Questions
What are the specific income and asset limits that could affect my benefits?
To qualify for SSI, you must have a monthly income of $2,349 or less as an individual or $3,581 as a couple. You can also have $2,000 in assets as an individual or $3,000 as a couple. Your SSI may decrease or end if a settlement payment pushes you above these limits.
What are the long-term financial implications of a settlement for someone with a disability?
When someone with a disability receives a settlement, it can greatly affect needs-based disability programs such as Supplemental Security Income or Medicaid. The amount of money they receive through these programs can be cut or stopped if the correct steps aren’t taken to protect their benefits. There may also be tax implications due to the settlement. Contact our team to learn more about how your settlement can affect your disability programs.
Will a lawsuit cash advance affect my disability benefits?
If you receive a lawsuit cash advance, it’s unlikely to affect your benefits. A cash advance won’t change your payments because your income or assets do not affect your SSDI. On the other hand, while your SSI is needs-based, a lawsuit cash advance will not affect your benefits as it is considered a loan, not an asset. Speak with one of our team members to learn more about your options for lawsuit cash advances in Los Angeles.
