Will a Car Accident Settlement Affect SSDI Benefits?

Friday, May 19, 2023

Will a Car Accident Settlement Affect SSDI Benefits?

Written by Malman Law, reviewed by Steve J. Malman.

Millions of Americans currently collect benefits from Social Security Disability Insurance (SSDI). Equally, there are millions who suffer car accidents each year in the country. When you find yourself in both categories, you may wonder if one will affect the other. If you were to receive SSDI benefits, how would that affect your car accident settlement? Would you still receive SSDI if you also receive compensation for your accident and injuries?

Many people assume that they know the answer to this question and decide to pass on seeking a settlement for their injuries because they do not want to risk losing their disability income. This assumption can be an expensive mistake, and victims often leave money on the table when they miss collecting damages that can help pay for their new injuries. 

Naturally, it is always best to consult with a car accident attorney for these types of issues. Victims who are injured by a liable party deserve to seek compensation for those injuries. 

Every situation is unique. SSDI is a complex area of the law, and compensation may or may not affect those benefits – dependent on the situation. Therefore, only an attorney can review your case and adequately decide how you could be affected.

How Many People Receive SSDI in Chicago and the U.S. as a Whole?

SSDI payments are given to injured employees, people who are disabled, and even disabled adult children. According to the Social Security Administration (SSA), there are 69 million Americans currently receiving benefits as of March 2019.

Most of these recipients are under Social Security Disability Insurance, which is available for anyone who has worked long enough to receive the credit. Others may receive regular SSI or Social Security Income, which helps provide lower-income individuals with funds because they cannot work from disability.

Right now, the average monthly SSDI payment is $1,160, which is a significant amount of money paid to an individual. Many people who are receiving SSDI rely on this monthly payment as their primary or only source of income. Therefore, you may wonder if you would lose that amount if you also have compensation from a car accident case. It is a fair concern for those who are unable to work and are counting on receiving this monthly SSDI payment. To answer this, you must first understand how SSDI works and how it differs from SSI.

How SSDI Benefits Work

SSDI are benefits paid out to those who have enough work credits earned over the course of their employment years. For those who are working and have taxes withheld from their paycheck, a portion of this money goes to FICA (the Federal Insurance Contributions Act).

These funds that are allocated to FICA are what make up SSDI and are held to payout to people who become disabled and unable to perform their jobs. These payments may also be paid out to the injured person’s partner or children. Think of this as a kind of savings account that is there in case you become disabled and unable to perform your job long-term.

When you have a disability or condition that is expected to last 12 months continuously, and that condition prevents you from working or performing activities that offer you gainful income, then you could qualify to receive these SSDI benefits. For those who are injured and unable to work for a time frame that is less than one year, short-term disability plans are meant to take care of them.

SSDI is not need-based. Therefore, the benefits you receive are legitimate insurance benefits. Payments are essentially premiums that you paid over your course of working for several years, and they were deducted from your paycheck every pay period. The insurance was there so that if you become disabled, you would receive payments until you went back to work, or you reached retirement age, or if the SSA deemed you no longer eligible.

If you are not working and you have no income, the SSA would not care if you received a settlement in a personal injury lawsuit. They also do not care about how much money your spouse might equally earn because the SSDI benefits are something you are entitled to because of your disability alone – not your means. You have paid into the trust fund with each paycheck; therefore, you are right to collect it.

How General SSI Benefits Work

SSI or Supplemental Security Income is different from SSDI in several ways. This is a “needs-based” program that is not related to your work history in any way. SSI is not something you pay in order to guarantee benefits if you become disabled. SSI receives funding from a separate federal money source than SSDI does. SSI collects funds from general tax revenue, such as corporate taxes and personal income tax.

In order to receive SSI benefits, you must be disabled for 12 continuous months, and you will receive wage-based income assistance. To qualify, you must meet the same criteria of SSDI, but your income and assets must be within a specific poverty range. If you do receive a settlement in a car accident lawsuit, it could jeopardize those SSI benefits you receive monthly.

In most cases, accepting any type of cash settlement would end your SSI benefits, as you would no longer qualify for this need-based program. With that compensation, you would no longer meet the asset test. In fact, assets as low as $2,000 can disqualify you from receiving SSI, and your car accident settlement is likely to exceed that amount.

Should You Sue or Just Seek Disability?

If you are injured in a motor vehicle accident, you may wonder if you should seek disability payments before filing a lawsuit. After all, SSI pays you monthly, which means consistent income that you can rely on to pay bills and help contribute to your household.

Disability could be your only option if you suffer from a disorder or condition that happened naturally. However, when your disability occurs because of someone’s negligence in a car accident, like a traumatic brain injury or spinal cord injury, you could sue that party for their negligence and receive compensation.

Many victims are hesitant about pursuing a lawsuit. This is because they might fear that the outcome is too unknown and there are too many factors at play that could affect their receipt of compensation. Disability insurance is more consistent, and they may feel more comfortable with that route.

Even if the SSA recognizes your disorder as a disability, that disability insurance payment is often way under the amount you would receive in a regular car accident lawsuit. Furthermore, the lawsuit covers compensation that you would not receive from SSI or SSDI, such as:

  • Lost wages
  • Medical expenses
  • Pain and suffering
  • Mental anguish
  • Loss of companionship
  • Quality of life changes

You receive SSDI or SSI for a monthly paycheck from the government, but these are not meant to compensate you for losses you incur because of the initial accident.

Collecting Damages in the Event of an Accident

Understanding the types of damages that are awarded in a personal injury settlement can help inform your decision on how to move forward as well. If you were injured in a car accident, taking the responsible party to court can often provide you with more than enough compensation to not only support yourself but cover costs that you paid out of pocket while you waited for a settlement.

Many of these costs are covered by the liable party in a personal injury case. You could receive compensation for the following:

  • Lost wages and potential future earnings
  • In-home medical devices
  • Medical costs paid and future medical costs
  • Nursing home or skilled nursing care
  • Ongoing physical therapy
  • In-patient or outpatient rehabilitation
  • Repairs to your vehicle
  • Pain and suffering
  • An extended hospital stay
  • Ambulance ride to the hospital

Social Security is strictly for your living wage, and the living wage is often well under what you were making before your injury or what you could have made if you were not injured and continued to work.

What if You are Already Receiving SSI?

If you are receiving SSI and you find yourself in a personal injury lawsuit, you are at risk of losing those government benefits. This loss can be catastrophic, and the necessary expenses like hospitalizations, surgeries, and therapies are no longer covered. They eat away at the compensation from your accident, and you find yourself struggling financially to move forward.

If you receive a settlement from a personal injury case and your income increases because of this, you could be disqualified from receiving future SSI benefits. Furthermore, your spouse’s income or assets may affect your eligibility for SSI. Additionally, since Medicaid benefits are also based on financial need, it is possible that your Medicaid benefits will be impacted as well. Those who rely on these benefits for both income and access to health care often find themselves in a very difficult situation.

Luckily, an attorney can help you with these types of instances. Often a special needs trust (SNT) can be used to protect you. These are specially designated trusts for disabled individuals. It allows you to access your settlement through a trust to pay for expenses.

While putting the compensation in an SNT, you can remain eligible for SSI because you no longer have a high-value asset or payout. If you find yourself in this situation, it is best to consult an experienced Chicago attorney to learn about your best course of action and next steps in order to avoid losing essential financial and medical benefits.

Assessing the Pros and Cons

If you are unsure whether you should seek SSDI or compensation in a lawsuit, here are some pros and cons to consider first:

Pro: You are more likely to receive a higher compensation value in a lawsuit than SSDI. Look at the average SSDI monthly payment. Then, consider how much your case is worth. An attorney can review your case and estimate what you would receive, then calculate it monthly. For serious injuries and permanent disability after an accident, you receive compensation for the wages you would have earned. You also receive pain and suffering damages, which compensate for mental anguish, physical pain, and emotional suffering. In most cases, you will find the monthly support higher in a lawsuit than filing for insurance benefits.

Pro: You are protected long-term with a lawsuit. SSDI benefits could be revoked at any time. The moment the SSA feels you no longer qualify, you lose your benefits. Therefore, you could only receive a few months of SSDI and have no income. If you are still suffering from injuries, you could be unable to work, have difficulty finding employment, and be without the compensation you need.

Con: Lawsuits take longer and could be drawn out in court. If you apply for SSDI benefits, it will take a few months, but you can receive the payment and back pay once you are approved. A lawsuit can take a few months to a few years, depending on the court’s current caseload, the defendant, and the evidence. While it does take time, you will receive compensation for that time you wait, including compensation for medical costs and lost wages you incur while waiting. Therefore, your wait is paid eventually.

Injured and Now Disabled from a Car Accident? Meet with an Advocate

There are many different factors to consider in the event of a car accident. The best way to decide if SSDI or a lawsuit is right for you is to meet with an advocate who can help to outline all of your options. The team at Malman Law offers a free, no-obligation consultation. That means you owe us nothing to meet and discuss your options, but also, you do not pay our attorneys unless we win compensation in your case.

Call us now to discuss your options at 888-910-6550 or request more information online.

Steve Malman

Malman Law’s founder Attorney Steven Malman has over 30 years of experience handling personal injury, nursing home, medical malpractice, truck accidents, car accidents, premises liability, construction, and workers’ compensation cases in Chicago, IL.

Years of experience: +30 years
Justia Profile: Steve Malman
Illinois Registration Status: Active and authorized to practice law—Last Registered Year: 2024

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This page has been written, edited, and reviewed by a team of legal writers following our comprehensive editorial guidelines. This page was approved by President and Founder, Steven J. Malman who has more than 20 years of legal experience as a personal injury attorney.

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