Will a Personal Injury Settlement affect SSI?

Will a Personal Injury Settlement affect SSI?

Since Supplemental Security Income (SSI) is contingent on financial need, any funds received from a settlement could impact your SSI benefits.

It is essential to disclose all earnings, assets, and any additional assistance, such as monetary awards from a personal injury lawsuit.

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Will a Personal Injury Settlement affect SSI
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Distinguishing SSDI from SSI: What Sets Them Apart?

Social Security Disability (SSD or SSDI) and Supplemental Security Income (SSI) can often lead to confusion due to their similarities.

However, it’s crucial to recognize the differences between them, as they not only have distinct eligibility criteria but are also treated differently regarding settlements.

SSD or SSDI benefits are accessible to disabled individuals who have a work history and have contributed to the Social Security trust fund through FICA taxes.

In some cases, individuals can receive SSDI benefits based on Social Security contributions made by their spouse or parents.

SSDI is categorized as an “entitlement benefit.”

On the other hand, Supplemental Security Income (SSI) is a federal program that offers financial support to disabled, blind, and elderly individuals with low incomes. SSI is classified as a “needs-based” government benefit.

What is the impact of a settlement on these benefits?

For those receiving Social Security Disability (SSDI), eligibility is primarily based on prior contributions to the social security system and meeting the Social Security Administration’s disability criteria.

Importantly, a personal injury settlement will not influence SSDI benefits.

Conversely, Supplemental Security Income (SSI) hinges on several eligibility criteria, including an asset test.

In fact, having assets as modest as $2,000 (or $3,000 for married individuals)1 can lead to disqualification from SSI benefits.

Accepting a cash settlement is likely to disrupt one’s eligibility for SSI.

Approaches to Safeguarding SSI Benefits

For many disabled individuals involved in personal injury settlements, the potential loss of their government benefits is a daunting prospect.

Essential expenses such as surgeries, prescription medications, therapy, home modifications, and the assistance of skilled nurses can quickly deplete the funds received from a settlement.

Most individuals simply cannot afford to forfeit their access to crucial needs-based government benefits.

Fortunately, our team regularly collaborates with disabled individuals to develop comprehensive settlement strategies, often incorporating the use of a specialized trust known as a special needs trust (SNT).

A special needs trust (SNT) is a specific type of trust designed for the benefit of disabled individuals, enabling them to utilize the funds held within the trust to cover their essential requirements.

Simultaneously, by directing the settlement funds into an SNT, a disabled person may potentially maintain their eligibility for SSI benefits.

Ensuring the Security of Social Security Payments

No matter the size of a personal injury settlement, SSDI payments remain secure.

Furthermore, there’s a method that allows an injured individual to receive a settlement award and maintain their SSI benefits.

The funds obtained from a personal injury lawsuit can be deposited into a Special Needs Trust.

A Special Needs Trust allocates resources for the injured party’s recovery and other needs, all the while permitting them to continue receiving their government benefits.

For optimal financial outcomes, it’s advisable to consult with a personal injury attorney who can provide guidance on structuring the settlement.

An image illustration of Personal Injury Settlements affecting SSI
Personal Injury Settlements affecting SSI
Source: (brockandstout)

Needs that might otherwise be financially challenging

  • Vehicle repairs
  • Emergency medical treatment
  • Hospital expenses
  • Surgical procedures
  • Medical practitioner charges
  • Medication costs
  • Medical equipment
  • Ongoing physical therapy or rehabilitation
  • Domestic assistance
  • Lost income
  • Forgone future earnings
  • Physical and emotional distress

SSDI payments remain unaffected, regardless of the settlement outcome, meaning there’s no risk in pursuing a compensation claim.

On the other hand, individuals receiving SSI payments might experience a reduction or loss of their benefits if they receive a personal injury settlement.

It’s crucial for them to assess the potential settlement amount and its duration in comparison to their monthly SSI payment.

Seeking the counsel of an experienced personal injury attorney can help evaluate the advantages and disadvantages of initiating a lawsuit to seek damages.


Understanding the potential consequences of a personal injury settlement on SSI benefits is crucial for individuals with disabilities.

While SSDI benefits remain secure, SSI recipients must carefully consider the financial implications and explore options like special needs trusts.

Seeking legal counsel is a prudent step to make informed decisions and safeguard one’s financial well-being.

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