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Yes, depending on the type of program you’re enrolled in, receiving a personal injury settlement could affect SSI benefits. Individuals who receive Social Security Disability Insurance (SSDI) are unlikely to have their benefits disrupted, but those who receive SSI and Medicaid may be more vulnerable. Supplemental Security Income (SSI) and Medicaid are both needs-based programs. Depending on how much your settlement is (and it doesn’t take much), you could end up with more assets or income than the threshold for qualification.
If you’re pursuing damages in a personal injury claim, it’s critical to speak with your Palm Beach Gardens personal injury lawyer about legal solutions to avoid loss of your SSI eligibility.
How does your personal injury settlement affect your SSI benefits
The SSA does consider personal injury settlements as an increase in your financial resources. Any lump sum you receive will be considered an asset in the month it is received and will be counted toward your eligibility threshold if the funds are still in your bank account at the end of the month. You could use your settlement to pay outstanding medical bills and cover property damage, replacement, or repair. As long as your assets fall below the eligibility limit, you should be able to retain your benefits eligibility.
How can I preserve my benefits eligibility after receiving a personal injury settlement?
Your settlement probably included funds beyond what you needed to settle your bills. Most personal injury plaintiffs receive compensation for their pain and suffering and emotional trauma(non-economic damages). Some even receive punitive damages (assessed against defendants whose actions are especially egregious as a form of financial punishment). This money can be a boon to you and your family, and careful management of your settlement can ensure that you benefit from it while also maintaining your benefits.
Your personal injury attorney can advise you if these strategies will be effective in your case:
Establish a Special Needs Trust
A Special Needs Trust (SNT) is a specialized form of trust established to benefit individuals with disabilities or special needs. The beneficiary financially benefits from the assets in the trust but has no control over the trust; therefore, they are not considered to legally own the assets. You can use the funds in the trust to pay approved expenses, like medical bills, physical therapy, or in-home caregiving services, without affecting your eligibility for SSI benefits.
Spend down your settlement
“Spending down” means using your settlement monies to purchase items or pay for services that aren’t considered assets under SSI guidelines. This can include paying your outstanding medical debts, making modifications or repairs to your home or vehicle to accommodate your disability, purchasing essential household goods, or buying a vehicle.
Opt for structured payments instead of a lump sum
Structured settlements are paid out in set installments over time; spreading out our payments can help you remain under your monthly asset limit, especially if you can incorporate spending down into your payment arrangement. Plan this carefully with your lawyer and the insurance company; not all cases are eligible.
Create a Medicare Set-Aside Account
A Medicare Set-Aside Account (MSA) is an account specifically to pay for future medical expenses related to the injuries from your personal injury case. An MSA can protect your future Medicare benefits by separating the funds allocated for your medical expenses from the rest of your assets.
Do you need help managing your personal injury settlement so you can preserve your SSI and Medicaid benefits? We can help. Call Lytal, Reiter, Smith, Ivey & Fronrath at (561) 655-1990 for a free consultation.