When you are involved in a personal injury accident, the last thing you want to worry about is how the settlement you need to pay your medical bills will affect the income you need to pay for daily life. However, it is a very real concern. How can settlements affect the major aid programs for those with disabilities?
Social Security Programs
Both SSDI and SSI are federal Social Security programs that provide cash benefits to the qualified disabled. These benefits are meant to provide healthcare and daily subsistence, though on different sets of merits. Individuals may qualify for one or the other, both, or neither program depending on the individual’s unique set of circumstances.
Supplemental Security Income
Supplemental Security Income, or SSI, is for those unable to work who would otherwise experience struggles paying for food and shelter. Typically, recipients are elderly, blind, or severely disabled; children may also receive SSI. SSI is a means-tested program with a set of financial requirements.
Most SSI recipients also qualify for Medicaid benefits. Medicaid provides a rather thorough set of healthcare benefits as it is both a state and federal program. Many SSI recipients apply for SSI to gain or retain Medicaid benefits. Though many depend on SSI for basic subsistence, the monthly amount given in 2019 is $771 for singles.
Social Security Disability Insurance, or SSDI, differs from SSI in that it is not a means-tested program. Instead, it is an entitlement available to any qualified person who is disabled and has paid into the Social Security system for at least ten years regardless of current income or assets. SSDI does not factor in the spouse’s income, though SSI does.
Individuals with SSDI qualify to receive Medicare benefits after two years of SSDI eligibility. Medicare does not provide the comprehensive coverage of Medicaid and the financial payout is often much larger. SSDI depends on the earnings record of the individual, so although the average monthly payment for 2019 is $1,234, an individual could theoretically see much more or much less.
Can a Settlement Affect My Disability Payments?
When considering whether a personal injury or other settlement can affect your disability payment, it is important to separate SSI from SSDI. If you receive both, answers will vary. However, if you receive either SSI or SSDI alone, the answer differs depending on your type of disability.
Settlements will not affect SSDI payments or your eligibility for Medicare. As stated, you earned SSDI benefits throughout your working life as a sort of insurance against disability. When you became eligible for SSDI, you began to receive back Social Security taxes you paid via income taxes. Even a large settlement or a settlement on behalf of your partner will not affect SSDI payments. Likewise, your eligibility for Medicare remains unchanged.
However, settlements hold the potential to drastically affect SSI payments. Once you receive the settlement, your income and assets see a positive upswing, which may be enough to eliminate you from SSI eligibility. If you currently depend on SSI for the costs of daily living, you may be at risk for severe financial issues once the settlement is spent.
What Should SSI Recipients Do?
If you receive a settlement, speak with an attorney – most likely your personal injury lawyer – about putting the settlement into a special needs trust. A special needs trust will set the funds aside to cover expenses not addressed by SSI and Medicaid, such as legal services and nursing home care while keeping SSI eligibility.
Setting up a special needs trust can be a complicated process, so speaking with an attorney is a good first step. Ensuring placement of any settlements in a special needs trust can help you or your loved one avoid missing crucial SSI and Medicaid benefits while helping secure a more solid financial future.