
If you’re receiving disability benefits and were recently in a car accident, you may be wondering whether a settlement could affect your monthly checks. It is a valid concern, especially since a lump sum from a personal injury case can seem like a windfall to government agencies keeping a close eye on your income.
To understand how this plays out, it is important to first understand the difference between SSI and SSDI benefits because your situation largely depends on which one you are receiving.
SSDI Recipients: Good News Ahead
The Social Security Disability Insurance (SSDI) benefit is based on your work history and the payroll taxes you paid over time. In other words, you earned it through your employment record.
If you are on SSDI, a car accident settlement generally does not affect your benefits. Why? Because SSDI is not based on your current income or assets but rather on your prior contributions to the system.
So, whether your settlement is $5,000 or $500,000, your SSDI checks will keep coming unless your medical condition improves enough that you no longer qualify as disabled under Social Security’s guidelines.
SSI Recipients: A Bit More Complicated
If you are receiving Supplemental Security Income (SSI), the rules are different. SSI is a needs-based program designed for individuals with limited income and assets. The government keeps a close watch on your financial resources, so a lump-sum car accident settlement could easily push you over the limit.
For 2025, the general resource limit for SSI is $2,000 for individuals and $3,000 for couples. If your settlement puts you above that, you could temporarily or permanently lose your SSI benefits.
Worse still, even if your resources drop back down below the threshold, there is no guarantee your benefits will be reinstated right away.
Protecting Your Benefits
So, what can you do if you are on SSI and expecting a settlement? First, do not panic. There are legal and financial tools that can help you protect your eligibility.
Spend Down Wisely: Certain types of spending do not count against your SSI limit.
For example, paying off debt, purchasing medical equipment, or making modifications to your home for accessibility are typically approved.
Special Needs Trust: This is one of the best options. A special needs trust holds your settlement money in a way that does not count toward your resource limit.
A trustee manages the funds, which can be used for things like education, transportation, and personal care not covered by SSI.
Make sure your trust is properly structured with help from an attorney experienced in both personal injury and disability law.
Talk to a Lawyer Before You Settle
Before signing anything, speak with an attorney. A knowledgeable personal injury lawyer can negotiate a better settlement and ensure it is structured in a way that will not jeopardize your disability benefits.
They can also refer you to a professional who can set up a special needs trust if necessary. It is also important not to hide the settlement. The Social Security Administration requires you to report any changes in your financial situation, including lump-sum payments.
Failure to do so could result in an overpayment, which you will have to pay back, or even legal penalties.
Conclusion
Getting into a car accident is stressful enough without having to worry about losing your disability benefits. That said, the impact a settlement will have on your monthly checks depends almost entirely on the type of benefit you are receiving.
With the right strategy, you can protect both your compensation and your benefits. Speak with a qualified personal injury lawyer and make sure your settlement does not cost more than it is worth.
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