At Battle Born Injury Lawyers, we have more than 85 combined years of experience helping injured Nevadans, and our attorneys previously worked on the insurance defense side of the system. We know that a settlement is only helpful if it improves a client's life. For clients who rely on disability benefits, protecting those benefits is part of the job. Our firm has recovered more than $100 million for clients.
A personal injury settlement generally does not affect Social Security Disability Insurance (SSDI) because SSDI is based on work history rather than financial need. Supplemental Security Income (SSI) is different. Because SSI is needs-based, a settlement paid directly to a recipient can reduce or suspend benefits unless it is planned carefully.
Does a Personal Injury Settlement Count as Income for SSDI or SSI?
A personal injury settlement is treated very differently by SSDI and SSI:
- For SSDI, a typical settlement for pain and suffering or medical bills is not counted as income that reduces benefits
- For SSI, the Social Security Administration's policy manual, POMS SI 00830.515, treats an award or settlement as unearned income, subject to the general income rules and exclusions
Not every dollar of a settlement necessarily counts against SSI. According to POMS SI 00830.515, Social Security may exclude portions of an award in several situations, including:
- Essential expenses of obtaining the award, such as attorney fees and medical costs connected to the accident
- Payments to repair or replace a lost or damaged resource, such as a vehicle totaled in a car crash
- Awards specifically excluded by federal law
- Amounts paid directly into a special needs trust or pooled trust that is not a countable resource
SSA's own example illustrates the rule:
- In a hypothetical $100,000 car accident settlement, SSA deducts $15,000 for the totaled vehicle and $30,000 for accident-related medical expenses
- The remaining $55,000 for lost wages and pain and suffering counts as unearned income in the month received and becomes a countable resource starting the following month
How Is SSDI Treated Differently From SSI After a Settlement?
SSDI and SSI are both run by the Social Security Administration, but they serve different purposes. SSDI is an insurance program funded by payroll taxes, so eligibility depends on a person's work credits and disability status rather than financial need.
Why SSDI Usually Is Not Affected
SSDI is generally unaffected by a personal injury settlement because of the program's structure. Key reasons include:
- Work-based eligibility: Benefits depend on work credits and disability status, not income or assets.
- No resource limit: SSDI does not cap how much a recipient can own or have in the bank.
- Typical settlement components: Compensation for pain, suffering, or medical expenses usually does not reduce SSDI payments.
The Workers' Compensation Exception
There is an important exception to the general rule. Situations that may affect SSDI include:
- Workers' compensation and public disability benefits: Under 42 U.S.C. § 424a, SSDI benefits may be reduced when a person also receives workers' compensation or certain public disability benefits.
- Private disability payments: According to SSA's publication How Workers' Compensation and Other Disability Payments May Affect Your Benefits, private disability payments generally do not trigger this offset.
- Mixed settlements: A settlement that includes a workers' compensation component may need special handling.
When You Receive Both Programs or Medicare
People who receive both programs or have Medicare face mixed rules. Considerations may include:
- Concurrent SSDI and SSI recipients: Some individuals with low SSDI payments also receive SSI; in such cases, the SSI portion remains subject to income and resource limits.
- Medicare reimbursement: SSDI recipients with Medicare may need to address potential Medicare reimbursement rights under the Medicare Secondary Payer provisions at 42 U.S.C. § 1395y(b).
Trust Battle Born Injury Lawyers When Your Settlement Affects Your Benefits
A settlement should be structured with the rest of a client’s life in mind, not just the dollar amount. Our attorneys have served in the Nevada Legislature and helped pass laws that protect injured people during recovery, including a law requiring hospitals to bill a patient’s health insurance rather than attaching charges directly to injury claims. Our litigators hold AV Preeminent ratings and Super Lawyers recognition.
Clients work with the same personal injury attorney from start to finish, and you can call, text, or meet with that attorney directly. With offices in Las Vegas, Henderson, and Reno, and a team available 24/7, we are ready to help. If you receive SSDI or SSI and have been injured, contact Battle Born Injury Lawyers for a free case evaluation.
Disclaimer: This content is for informational purposes only and does not constitute legal advice. Every case is different and should be evaluated individually, as the law in this area is extremely nuanced. Past results do not guarantee future outcomes.
Sources
- POMS SI 00830.515: Awards and Settlements, Social Security Administration
- How Workers’ Compensation and Other Disability Payments May Affect Your Benefits, Social Security Administration
- 42 U.S.C. § 424a and 42 U.S.C. § 1395y, Office of the Law Revision Counsel
