Yes, a personal injury settlement can affect your eligibility for Supplemental Security Income (SSI) and Medicaid, which are based on income and assets. However, Social Security Disability Insurance (SSDI) is tied to your work history and disability, so receiving a lump sum may not impact those benefits.
To avoid risking your SSI or Medicaid, itโs important to speak with an experienced San Luis Obispo personal injury lawyer who can help you protect your benefits.
How does a personal injury award affect SSI benefits?
The Social Security Administration (SSA) considers personal injury settlement funds to be an increase in your financial resources. If you receive the money in a lump sum, it will be considered an asset in the month you receive it and counted toward your financial eligibility for the program. However, as long as the money is spent or otherwise dispersed by the end of that month, your benefits should continue.
If youโre using your settlement to pay outstanding medical bills or repair or replace damaged property, be sure to take care of those expenses right away.
How do I preserve my Social Security benefits after receiving a personal injury settlement?
Your settlement likely included compensation for lost wages, pain and suffering, and other losses beyond medical bills. This money can be a boon, especially if you fell behind on bills because you were out of work recovering from your injuries, or if you had to use credit cards to stay afloat while you were waiting for your personal injury settlement to come through.
There are a few strategies your personal injury attorney may recommend to preserve your benefits and keep your money.
Create a Special Needs Trust
A Special Needs Trust (SNT) is a trust with specific rules, intended to enhance the life of someone with a disability. You can create the trust yourself, but then you must relinquish control of the trust to the trustee; the beneficiary of an SNT cannot have any control over the trust.
You can use the trust to pay for things Social Security and Medicare donโt pay for, like durable medical equipment or modifications to your house or vehicle, if the accident left you disabled.
Take structured payments instead of a single payment
A structured settlement is paid out incrementally over time. Spreading out your payments over time helps ensure your monthly income remains under the limits set by the SSA. Plan carefully, though; if you can combine a structured settlement with โspending downโ to reach Medicaid eligibility, then you should be in a good position to maintain your benefits and be able to enjoy every penny of your award.
Open a Medicare Set-Aside Account
A Medicare Set-Aside Account (MSA) pays for future medical expenses related to the injuries you suffered in your personal injury claim. MSA protects your Medicare benefits by separating your settlement money (allocated for future medical treatment) from your personal assets. Unlike an SNT, the beneficiary of the MSA can administer the account, although you can also opt to have a professional account manager handle your funds.
Protect your benefits and get the guidance you need
A personal injury settlement can give you the resources you need to move forward, but it can also create unintended consequences for your Social Security benefits or Medicaid eligibility. Before you agree to a settlement or make financial decisions, itโs critical to talk to a knowledgeable attorney who understands both personal injury law and government benefit rules.
At Ernst Law Group, we help people whoโve been seriously injured protect their rights and their future. If you have questions about your settlement or need legal help after an accident, call us today at (805) 541-0300 for a free consultation.
