When someone is already receiving Social Security Disability Insurance (SSDI) and then receives a personal injury settlement, questions naturally arise about how that settlement may influence their benefits. Below is an informative breakdown to help you understand.

What Is SSDI and Who Qualifies?

SSDI is a federal program designed to support individuals whose disabilities prevent them from working. To qualify, you must have:

• A disability that meets the Social Security Administration’s definition
• A sufficient work history, meaning you earned enough Social Security credits through prior employment

Once approved, SSDI benefits are calculated based on your earnings history. Some family members may also qualify for benefits in certain cases.

SSDI vs. SSI: Key Differences

It’s important to distinguish SSDI from Supplemental Security Income (SSI).

• SSDI is based on your work contributions via payroll taxes. There are no strict limits on your income or resources once you are receiving SSDI.
• SSI is a need-based program; it supports disabled, elderly, or blind individuals who have limited income and assets. Because it is means-tested, a large settlement or increased income could reduce or eliminate SSI eligibility.

Does a Lump-Sum Personal Injury Settlement Affect SSDI?

In most situations, the answer is no. Once you are approved and receiving SSDI, a personal injury settlement generally does not change your eligibility or force a reduction in benefit levels.

That said, there can be implications in related areas:

• Medicare costs and premiums: If your settlement includes amounts intended to cover future medical expenses, it may affect how Medicare treats those costs.
• Future medical allocations: The portion of your settlement tied to ongoing medical care may be scrutinized in connection to your SSDI benefits.

How to Preserve SSDI Benefits When Accepting a Settlement

To reduce risk of conflict with SSDI or related benefits, consider these strategies:

• Structured settlement: Instead of accepting one large payment, spread the settlement over time. This may help manage how it interacts with other benefit programs.
• Special needs trust: While more commonly used to protect SSI and Medicaid, a properly drafted trust may help shield certain assets from counting against means-tested programs.
• Medicare set-aside (MSA): Allocate part of your settlement specifically for future medical care tied to your injury, keeping those funds separate and in compliance with Medicare rules.
• Legal advice specialized in SSDI: Because the rules are complex, working with a law firm experienced in both personal injury and SSDI helps ensure your settlement is structured in a way that safeguards your benefits.