How Does a Lump Sum Settlement Affect Social Security Disability?

You need to know that the compensation you receive from a personal injury will not change your Social Security Disability Insurance payments, but it can severely affect the Supplemental Security Income benefits. It can also result in the reduction or loss of SSI benefits.

Getting a lump sum of money due to a worker’s compensation case can reduce your disability payments.

After knowing how doing a settlement can affect your disability benefits, you can make efforts to protect your benefits from complete elimination or reduction.

You can even get help from disability lawyers in Tampa.

Personal Injury Disability and Settlement Benefits

The Social Security Administration (SSA) is in charge of SSDI and SSI benefits.

Getting a big settlement from a personal injury lawsuit affects your disability benefits differently depending on which program you get them from.

For SSDI Benefits:

If you get SSDI benefits, a settlement usually won’t change your payments. That’s because these benefits are based on your work history, not how much money you have.

As long as you have a qualifying disability and enough work credits, your SSDI benefits should stay the same.

Getting a personal injury settlement won’t directly impact these benefits.

For SSI Benefits:

But if you get SSI benefits, a big settlement can lower your monthly payments or even stop them. SSI is for people who have low incomes and only a little money or assets.

To keep getting SSI, you have to pass a test that looks at all the money and things you own, including settlement money.

If your settlement makes your overall financial situation worth more than what’s allowed for SSI, your benefits might be reduced or taken away.

How to Keep SSI Benefits After Getting a Personal Injury Settlement?

Getting a big lump sum of money from a settlement can affect your SSI benefits. But there are ways to protect your benefits and still get your settlement.

Spending Down Settlement Money

Spending down means using the extra settlement money to pay for things that won’t make you lose your SSI benefits.

You have to do this in the same month you get the lump sum. Some things you can spend the money on are:

• Changing your home to make it better for your disabilities
• Paying off your home loan
• Paying off student loans, credit card debt, or other money you owe
• Paying for your funeral in advance
• Putting the money into a Special Needs Trust

Using a Special Needs Trust:

You can keep your SSI benefits by putting your settlement money into a special trust. This trust will save money for things that SSI doesn’t cover, like nursing home care or certain therapies.

It lets you still get SSI and use the money when you need it. Making this trust can be complicated, so it’s a good idea to talk to a lawyer about it.

Getting Both Workers’ Compensation and Disability Benefits

If you’re getting SSDI benefits and you get hurt at work, you might also be able to get workers’ compensation payments.

This is true if your disability happened because of something that happened at your job.

For example, let’s say you have an eye problem called hemianopia that qualifies you for disability benefits. Hemianopia can be caused by traumatic brain injuries.

If you get SSDI benefits because of your hemianopia, you might also get workers’ compensation if your eye problem is because of something that happened at work.

How Does Workers’ Comp Settlement Impact Social Security Disability?

If someone is eligible for both workers’ compensation and Social Security Disability Insurance (SSDI), they can’t receive the maximum amount from both at the same time.

The total of these payments should not be more than 80% of what the person used to earn before they became sick or injured.

If the total of these benefits is more than 80% of what they used to earn, their SSDI benefits will be reduced.

The reduction in the same is called a benefit offset. It’s done to make sure people don’t get paid twice for the same lost wages from two different programs.

SSDI benefits help workers who are paid into the system. It gives them financial support to replace some of their wages if they can’t work due to a disabling illness or injury.

People who get benefits from workers’ compensation also get money to replace their lost earnings.

So, the benefit providers need to lower their payments to ensure that people don’t get more than 80% of their usual earnings.

When SSDI payments are offset, the Social Security Administration (SSA) takes into account that people often receive lump-sum workers’ compensation settlements.

They convert the lump sum into monthly payments to do this.

The SSA divides the lump sum by the monthly payments the person was receiving and then applies the SSDI benefit offset for that number of months.

How to reduce the amount of SSDI offset?

There are ways to make sure you don’t lose too much of your SSDI benefits. Disability lawyers know these tricks and can help you keep more of your money.

Settlement Agreement Language

The words in your workers’ compensation settlement agreement matter.

If it’s not clear or doesn’t have special terms, the Social Security Administration (SSA) might take the whole settlement amount into account when reducing your SSDI benefits.

Lawyers can make sure that certain expenses, like medical bills, attorney fees, and more, are not counted in the offset. The SSA will need proof of these expenses.

Amortization Provision

You can also reduce the offset by adding an amortization provision to your settlement agreement.

This means your settlement is paid out over your lifetime instead of all at once. This can get rid of the offset or make it much smaller.

Reporting Lump Sum Settlements

If you get disability benefits and you get a big one-time payment, you need to tell the Social Security Administration (SSA) within 10 days. Not telling them can lead to serious problems.

Getting disability benefits shouldn’t stop you from going after other people for money if they cause your disability.

With help from a Social Security attorney in Tampa, FL, you can figure out how to get big one-time payments without messing up your disability benefits.