For many people who are unable to work due to a disability, Social Security Disability Insurance (SSDI) serves as a necessary source of income. If you are receiving SSDI benefits and win a personal injury award after an accident, you may wonder whether that compensation could put your benefits at risk.
The answer to this question depends on the type of Social Security benefits you receive, as SSDI and Supplemental Security Income (SSI) operate under very different rules.
SSDI vs. SSI rules and considerations
SSDI benefits are awarded based on your work history and the payroll taxes you paid into the system over the years. Because they are not based on your income and assets, a personal injury settlement or jury award will not typically reduce your SSDI payments. In other words, you can generally recover compensation for your injuries without worrying that it will reduce your monthly SSDI check. This makes sense because SSDI is treated as an insurance program, and the benefits you receive are tied to your work record, not your current financial situation.
With that said, there are still potential ways a personal injury award can affect your overall financial picture. One issue involves Medicare eligibility, which usually begins after two years on SSDI. A settlement may need to account for future medical expenses that Medicare would otherwise cover. This may require setting up a Medicare Set-Aside account to better ensure that settlement funds earmarked for medical care are spent appropriately before Medicare begins paying. Failure to do so can cause problems with Medicare coverage down the road.
Another concern is the possibility of receiving both SSDI and SSI. Some people qualify for a small SSI payment in addition to SSDI because of limited resources. In this case, a personal injury award could reduce or even eliminate SSI benefits since SSI is need-based and considers income and assets.
The bottom line is that while SSDI benefits are not directly reduced by personal injury compensation, planning is often required to protect related benefits and to avoid unexpected issues. Consulting with a skilled legal team can help to ensure that you receive the full compensation you deserve while safeguarding your long-term financial security.
