Will a Personal Injury Claim Settlement Impact My Supplemental Security Income Payments?
Supplemental Security Income (SSI) is a needs-based program providing financial assistance to people who are elderly, blind, or have a disability who have limited income and resources. Because there are income and asset limits on SSI eligibility, a personal injury settlement can affect whether and how much you’ll receive. But if the settlement is structured correctly, this may not be a problem.
What is SSI?
SSI helps eligible individuals and families meet basic needs such as food, shelter, and clothing. Key points include:
- Eligibility: To qualify, you must be at least 65, blind, or disabled. You must also have limited income and resources. Eligibility is not based on your prior work history or contributions to the Social Security system
- Income and resource limits: The program considers income from various sources and the value of assets and resources. If your resources fall below certain thresholds, you may be eligible for SSI
- Payments: Recipients get a monthly cash payment from the federal government. The amount is based on factors such as other income, your living situation, and marital status
- State supplementation: California provides additional money to the federal SSI payment
- Medicaid eligibility: SSI recipients are often automatically eligible for Medicaid (or Medi-Cal in California), which provides health care coverage. It covers medical expenses and prescription medications. SSI payments are very low. Depending on your health, medical coverage may be more important to you than the cash payments
- Redetermination: Eligibility for SSI is periodically reviewed to ensure that you continue to meet the program’s requirements. Changes in income (like a personal injury settlement), living arrangements, or health status may end your eligibility or decrease your payments
The Social Security Administration (SSA) administers SSI, Social Security Disability Insurance (SSDI), and Social Security retirement benefits. SSDI and retirement benefits are based on your work history and payments to the Social Security system. General tax revenues fund SSI. Those getting SSI may be too disabled to work, or they worked but were paid in cash and didn’t contribute to Social Security.
How Would a Settlement Impact My SSI Payments?
The settlement may affect your SSI eligibility. The program is need-based, and eligibility is based on your income, financial resources, and other issues. Like any other form of income, if you receive a personal injury claim settlement, it may impact both your income and resource levels, which may make you ineligible for SSI or reduce your benefits:
- Income impact: The settlement amount may be considered as income, and depending on the amount, it could push your total income above SSI’s eligibility limits ($1,913/month)
- Resources impact: SSI also limits the amount of resources you can have ($2,000). Your settlement could increase how much money is in your bank accounts, how much you invest, and ownership of just about anything that could be sold to support you and your family
- Reporting requirements: You must report any changes in income or resources to SSA, including personal injury settlements. Failure to do so promptly could cause overpayments or other problems
You’ll also lose your Medicaid/Medi-Cal benefits if your income and resources exceed what’s allowed.
Is There a Work Around?
Your settlement could be transferred into a special needs trust. How would that work?
- Trust: A trust is a legal and financial arrangement where one party, the “grantor” or “settlor” (you), transfers assets (the personal injury settlement) to the trust (a legal entity), and the “trustee” holds and manages them to benefit the “beneficiary” (you)
- Special needs trust: Also known as a supplemental needs trust, it provides for the wants and needs of the beneficiary (you, a person with a disability) without risking their benefits (like SSI and Medicaid). The trust improves the beneficiary’s quality of life by supplementing the government benefits you receive (in your case, by using settlement proceeds)
Because you’re not directly controlling the trust (the trustee’s job), SSA shouldn’t consider your personal injury settlement as income or resources affecting your SSI eligibility. Creating a special needs trust to maintain your SSI benefits is complex, with strict disbursement rules. You should consult with an experienced personal injury lawyer concerning setting up a special needs trust.
The Hicks Firm often handles cases for recipients of government programs who suffer injuries due to other parties’ negligence. We’ve created many trusts to help them maintain their eligibility while benefitting from settling their case.
Aaron Hicks is an Orange County Personal Injury Attorney You Can Trust
If you or a loved one are injured by another party, Aaron Hicks and the Hicks Law Firm will assist you in any way we can. We help clients throughout Southern California and Orange County, including Costa Mesa, Irvine, Tustin, Newport Beach, and Huntington Beach, with their personal injury claims.
We have represented many injured plaintiffs in Orange County over the years and look forward to helping you, too. Call us at 949-541-9944 or fill out our online contact form so we may discuss your case.
Aaron Hicks is a civil trial attorney and founder of Hicks Law Firm, based in Orange County with offices in San Diego and Tennessee. His practice includes representing plaintiffs in personal injury cases including motor vehicle accidents, premises liability, dog bites and wrongful death. Mr. Hicks is and AV Rated attorney, Super Lawyer and is currently on the Board of Directors of the Orange County Trial Lawyers Association where he serves as 1st Vice President.
