Personal Injury Settlements and Disability Benefits

If you are receiving disability benefits like Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI), you need to be aware of how the receipt of a personal injury settlement could affect your benefits.

Social Security Disability Benefits

Receiving a personal injury settlement may or may not affect your SSDI benefits. In New York, there are no asset limits that limit the receipt of SSDI, and income limits are on earned income, i.e. income you earn from paid work. However, the terms of a personal injury settlement agreement can provide funds for future medical expenses, which can become problematic if an individual on SSDI relies on other benefits, such as Medicare and/or Medicaid, due to their disability.

Supplemental Security Income

When receiving a personal injury settlement, an individual on SSI in New York must report it to the Social Security Administration (SSA) within 10 days. A personal injury settlement, without further specialized planning, will generally cause either a reduction or termination of monthly SSI benefits, since SSI has income and asset limitations on eligibility. A personal injury settlement will increase your income or assets, often beyond threshold limits.

You should carefully review the rules and regulations with respect to disability benefits with a qualified attorney to understand your personal injury settlement’s potential impact on such benefits.

 The Role of a Special Needs Planning Attorney

There is hope for those who are facing the potential loss of benefits due to an expected personal injury settlement.

A special needs planning attorney can help you plan to eliminate or mitigate the loss of benefits from a personal injury settlement. Strategies, such as the creation of a first-party special needs trust (SNT) funded with the proceeds of your settlement and the inclusion of such trust in your settlement negotiations, can be implemented to help prevent the loss of benefits and ensure that your settlement doesn’t do you more harm than good.

If you would like to speak with an experienced special needs planning attorney regarding preserving your benefits, or if you have questions about something you have read, please do not hesitate to contact our office at 1 (800) 680-1717. We look forward to the opportunity to work with you.