After you are declared disabled, you may become involved in a legal claim and/or lawsuit that might end in a financial settlement. A personal injury claim, such as a car or other accident, could lead to a settlement in the thousands. Much will depend on the circumstances of what led to the lawsuit. But if you’re on SSDI, you may be asking yourself, will a lawsuit affect my SSDI, and how will that settlement impact your monthly income?
Social Security Disability Insurance, or SSDI, is based on a person’s earned income from the time they begin work until the day they are disabled. Unlike SSI or other need-based programs, it’s dependent on your disability, not your income or assets. However, there are instances when the extra money could impact other programs that provide for you.
Will a lawsuit affect my SSDI? In most cases, a personal injury or other civil lawsuit will not reduce or stop your SSDI payments. However, it can affect other benefits, such as SSI or workers’ compensation offsets, and can impact how the insurance company values your case.
How SSDI Works With Lawsuits
SSDI is an “earned benefit” based on your work history and disability status, not on your current income or assets. Because it is an earned benefit, a personal injury, car accident, or other civil settlement usually does not change your monthly SSDI benefit, no matter how much you receive in the settlement.
However, if you receive both SSDI and SSI, the SSI portion may reduce or stop when you receive a lump-sum settlement because SSI is needs-based and counts most forms of income and assets.
Will A Lawsuit Affect My SSDI?
For most Houston claimants, the answer to “Will a lawsuit affect my SSDI?” is “no” when discussing a typical personal injury settlement. You can generally pursue a lawsuit for injuries, pain and suffering, and other losses while continuing to receive your SSDI benefits each month.
That said, your SSDI benefits can indirectly affect your lawsuit, because the defense may argue you already receive disability payments and challenge certain damage categories, especially future lost wages.
SSDI And Lawsuit Settlement Rules You Should Know
When thinking about SSDI and lawsuit settlement rules, it helps to break them into a few key points that you can review with a Houston disability lawyer:
- Personal injury or negligence settlements do not count as income for SSDI eligibility, so your benefit is usually safe.
- SSI follows much stricter asset and income limits, so a settlement can reduce or terminate SSI and may also affect Medicaid unless planning tools like a special needs trust are used.
- If you receive workers’ compensation plus SSDI, there is an “offset” rule that caps your combined benefits at 80% of your pre-disability earnings. Therefore, a lump-sum workers’ comp settlement can temporarily pause or reduce SSDI.
Reporting Settlements And Protecting Benefits
Protecting SSDI when pursuing a personal injury settlement mainly means planning so the case and payout do not accidentally reduce your disability income or related benefits. The core strategies involve how the claim is structured, how the settlement is handled, and how it interacts with any SSI, Medicaid, or workers’ compensation you receive.
If you receive SSI or Medicaid along with SSDI, you generally must report a personal injury settlement within a short time frame. SSA and related agencies can recalculate your eligibility based on this windfall. An attorney can sometimes use tools like special needs trusts to shelter funds so you can keep essential needs-based benefits while still accessing compensation from your case. Therefore, you must begin that process before you receive any compensation.
Because every case is different, it is important to tell both your disability lawyer and your personal injury lawyer about all benefits you receive before you file or settle a claim. A Houston disability law firm can review your situation, explain how SSDI and lawsuit settlement rules apply to you, and help structure your case to preserve as much of your financial support as possible.
Houston’s Social Security Disability Insurance Attorney
We’ve helped over 6,000 Houstonians get SSDI and other disability benefits. The Herren Law Firm in Houston, TX, can assist with your application, appeals, and records gathering to prove your case and win your claim. Contact us today at 713-682-8194 (or use our online contact form) to schedule your free consultation. There’s no obligation, and no up-front fees, and we only collect a fee if we win your case.
