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Car accident settlement will I lose disability benefits?

Recently on our legal forum a user asked, “I am a sixty-year old woman who receives Social Security Disability Insurance (SSDI) for severe arthritis and diabetes. Recently I was struck by an 18 wheeler truck and suffered severe life-threatening injuries. I will be receiving a $60,000 car accident settlement from the trucking company, but I am concerned that the SSA may decide to reduce or eliminate my SSDI payment. Do I need to be concerned? Is my SSDI payment protected?” disability-legal-help

SSDI and car accident settlement

Social Security Disability Insurance (SSDI) is paid to claimants who have a severe health condition which does not allow them to work for at least 12 continuous months. To qualify for SSDI benefits, however, workers must work and earn work credits and be considered “insured” for SSDI. What does this mean for you? If you qualify for SSDI then this means you worked long enough and paid enough employment taxes to be insured for SSDI. Payment for SSDI benefits is based on your work records and does not have any income or resource limits to qualify. Although you are limited in the amount of earned income you can make to receive SSDI benefits, unearned income such as a car accident settlement will not eliminate your right to SSDI benefits. Additionally, other types of unearned income such as a spouse’s income, investments, rental income, and interest on investments will also not jeopardize your SSDI benefits. Supplemental Security Income (SSI) is another story Supplemental Security Income benefits are another type of wage assistance provided by the Federal Government to the blind, aged, and disabled who are unable to work for at least 12 continuous months. Because you are currently receiving SSDI benefits you do not have to worry about your personal injury settlement. There are, however, a large number of SSI recipients who are receiving Supplemental Security Income benefits and who do have to be very careful that they do not receive income or resources which exceed the federal limits, thus jeopardizing their SSI payout. Although there is a way to preserve SSI benefits and receive a car accident settlement (i.e. you may be able to create a Special Needs Trust), before making the decision about whether to take the money or not, it’s important to talk to a financial expert who understands the ramifications of the decision. For example, creating a trust can substantially limit the amount of control you have over the money, if you die the proceeds may be used to repay the government before heirs inherit the balance, and you will incur certain costs creating and maintaining the trust. Another option for some claimants might be to take the personal injury payout and spend it. Although you may jeopardize your SSI payments for a short period of time, you might be able to spend the personal injury settlement on certain things such as paying off your mortgage or buying a car. Keep in mind, however, it’s important not to accumulate any additional resources which are not exempted from the resource calculation. Bottom Line: Getting a car accident settlement does not jeopardize your SSDI benefit, but it could eliminate your right to get Supplemental Security Income (SSI).