Disability Benefits and Legal Settlements

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 rather 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. That portion would be considered income, as would additional damages such as punitive or exemplary damages.

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, there is a way to maintain your eligibility. That is to pass an asset test; it 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.

Receiving a Settlement and Preserving SSI Benefits

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. Your healthcare costs can be paid for through the trust and your much-needed SSI benefits are available to meet all your daily needs.

Will My Benefits Affect My Settlement?

A settlement is not likely to 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 terms of the settlement. It can’t include lost wages if you receive SSDI. And when lost wages aren’t taken into account, settlement amounts tend to be much less.

Regardless, the settlement amount must be reported 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.

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. Are you concerned that legal funding in Los Angeles and any potential settlement may affect existing benefits? We don’t check your income or credit to determine your eligibility for lawsuit funding, but you can contact us at 855-870-2274 to discuss whether your California legal funding may impact SSI or SSDI eligibility. Call us today for a thorough consultation or submit a free online application for a review of your case.