For individuals who are receiving Social Security Disability benefits, getting a car accident settlement can raise important questions about how will a car accident settlement affect my SSDI benefits. Understanding the difference between SSI and SSDI, and how each program views car accident settlements, is important for protecting your benefits after a personal injury.
The Difference Between SSI and SSDI
Social Security Disability benefits fall under two primary programs: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). While both provide financial assistance to those with disabilities, the eligibility criteria and how outside income affects each program are very different.
- Social Security Disability Income – This government-provided income is based on your work history and the amount of Social Security taxes you paid before becoming disabled. SSDI benefits are not affected by car accident settlement income or assets.
Social Security Income – SSI, on the other hand, is a needs-based program for individuals with limited income choices and resources. It is designed for people who are disabled, blind, or over the age of 65 and who have little or no income or assets. Because of these strict financial limitations, receiving any kind of settlement, such as from a car accident, can directly impact SSI benefits.
SSI and Car Accident Settlement
For those receiving SSI, a car accident settlement is treated as a type of income when received and as an asset if any portion remains after the month of receipt. This means that a lump sum payment from a personal injury settlement can reduce or even eliminate monthly SSI payments.
If the total amount of your car accident settlement plus your existing resources exceeds the allowable limit, which currently sits at $2,000 for individuals and $3,000 for couples, the Social Security Administration (SSA) may suspend your SSI benefits until you spend down the excess amount.
To avoid losing SSI eligibility, many SSI recipients choose to place their car accident settlement funds into a Special Needs Trust (SNT). When properly structured, an SNT allows you to use the funds for specific approved expenses without counting the money as a resource or form of income that affects your SSI eligibility.
It’s important to consult with a qualified car accident attorney who understands both personal injury settlements and Social Security rules. At Roberts Personal Injury & Car Accident Lawyers, our team regularly helps clients throughout Stockton and Modesto manage these complex issues.
How Will a Car Accident Settlement Affect My SSDI Benefits?
The good news for SSDI recipients is that personal injury settlements generally do not affect ongoing SSDI payments. SSDI is not a means-tested program, meaning your assets and unearned income do not factor into your monthly benefit amount.
However, there are some specific circumstances where a settlement could indirectly affect your SSDI benefits:
- Public Disability Benefit Offset – If you are receiving other forms of public disability benefits, such as workers’ compensation, your total combined benefits (including your settlement) could exceed federal limits, triggering a reduction in your SSDI payments.
- Taxable Income Thresholds – Large accident settlements could increase your total income for the year, potentially making part of your SSDI benefits subject to federal income tax.
- Eligibility for Other Programs – Although your SSDI payments will likely remain unchanged, a settlement could affect your eligibility for programs like Medicaid or Supplemental Nutrition Assistance Program (SNAP), both of which have income or asset limits.
Working with an experienced personal injury attorney who understands these rules can help minimize any negative financial consequences.
Do You Have to Report Settlement Money to SSI?
Yes, car accident or personal injury settlement money must be reported to the Social Security Administration if you are receiving SSI benefits, but not necessarily if you are just receiving SSDI benefits. Failing to report new income or assets to SSI could result in:
- Overpayment penalties
- Suspension of benefits
- Allegations of fraud
The SSA requires you to report any changes in income, including lump sum settlements, within 10 days of receiving the funds. Even if you plan to spend the settlement quickly or place it in a trust, you still need to report it first.
If you are unsure how to report your accident settlement or are wondering how SSI and car accident settlement affect each other, don’t hesitate to consult with a lawyer familiar with both Social Security benefits and personal injury law. Our team at Roberts Personal Injury & Car Accident Lawyers works closely with clients in the Stockton and Modesto areas to make sure that accident victims remain in compliance while protecting their access to essential financial support.
Can You Sue Someone on Social Security Disability After An Accident?
Receiving SSDI benefits does not mean that you are exempt from filing a lawsuit or, in turn, exempt from being sued yourself. SSDI is not based on your current income or resources, so a victim’s right to take legal action remains intact.
Individuals on Social Security Disability have every right to hold negligent drivers accountable for medical expenses, lost wages, pain and suffering, and other damages. The key is to ensure that your settlement is structured in a way that won’t negatively impact any other benefits you receive, especially if you also rely on needs-based programs like Medicaid or Supplemental Security Income.
Legal Assistance for Accident Victims on Social Security Disability in Stockton and Modesto
If you receive SSI or SSDI and are pursuing a car accident settlement to pay for injuries you’ve sustained in an accident, the decisions you make now can affect your financial stability for years to come. The legal team at Roberts Personal Injury & Car Accident Lawyers understands how to balance your injury claim with the complexities of Social Security benefits.
Our personal injury and car accident firm helps accident victims throughout Stockton and Modesto maximize their settlements while safeguarding their disability income. From negotiating with insurance companies to working with financial planners or special needs trust attorneys, we offer legal advice and support every step of the way. For a free case consultation and personalized advice about your case, contact our team today.
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