Will a Personal Injury Settlement Affect My Disability Benefits?

If you receive Social Security Disability benefits, the thought of pursuing a personal injury claim may raise an important concern: Will your settlement reduce or eliminate the benefits you rely on? The answer depends on whether you’re receiving Social Security Disability Insurance or Supplemental Security Income.

A knowledgeable Pennsylvania personal injury lawyer from Edelstein Martin & Nelson can explain how a settlement interacts with these programs and help structure your recovery to protect your financial stability.

Understanding the Difference Between SSDI and SSI

The Social Security Administration offers two disability benefit programs:

• Social Security Disability Insurance (SSDI): Based on your prior work history and payroll tax contributions. Your monthly benefit is determined by what you paid into the system—not your current financial situation.
• Supplemental Security Income (SSI): A needs-based program for individuals with limited income and resources. SSI eligibility depends heavily on your financial picture, including cash, assets, and other income.

This distinction is crucial when evaluating how a personal injury settlement affects your benefits.

Settlement and SSDI

If you receive SSDI, your personal injury settlement typically won’t reduce your monthly disability benefit. SSDI is not a needs-based program, so compensation from a lawsuit or insurance payout does not count against you. However, there are a few important caveats:

• Offset for workers’ compensation: If part of your recovery includes workers’ comp benefits, the SSA may reduce your SSDI temporarily.
• Medicare considerations: After two years of SSDI eligibility, you qualify for Medicare. A large settlement may affect how your medical expenses are coordinated with Medicare, and special arrangements like Medicare set-asides may be needed.

In general, with careful planning, your settlement and SSDI can coexist without jeopardizing your monthly disability checks.

SSI and Injury Compensation

Things work very differently with SSI. Because SSI is strictly needs-based, a personal injury settlement can significantly impact your eligibility. The SSA may treat a settlement as income in the month you receive it and as a resource in later months. This could reduce or even suspend your SSI payments.

For example, if you’re living near Center City in Philadelphia and receive SSI to cover rent and basic expenses, a large settlement after a car crash on I-76 or near the Benjamin Franklin Parkway could push your income above SSI’s threshold. Without careful handling, you could lose benefits.

Protecting Your SSI Benefits

The good news is that legal tools exist to protect your SSI eligibility while still allowing you to use your settlement. These include:

• Special Needs Trusts: Place your settlement funds in a trust that pays for approved expenses without counting as a resource for SSI purposes.
• Structured settlements: Spread payments out over time instead of a single lump sum, reducing the risk of exceeding SSI limits.

Both options require precise drafting and administration. Working with a lawyer ensures that your SSI and injury compensation are managed in a way that safeguards your long-term financial stability.

Personal Injury Disability Benefits and Timing

How and when you receive your settlement can affect how benefits are counted. For example, receiving a lump sum directly may disrupt SSI, while directing funds into a trust may not. Documentation and clear communication with the SSA are also essential—any errors or omissions can cause delays or overpayment claims.

Why Local Guidance Matters

Pennsylvania residents dealing with both personal injury claims and disability benefits face unique challenges. Courts in Philadelphia, Pittsburgh, and Harrisburg see these issues regularly, and local knowledge can make a difference. Whether your accident occurred on Broad Street near Temple University, along the Schuylkill Expressway, or in the suburbs of Montgomery or Bucks County, having a local advocate ensures your case is built with Pennsylvania-specific insight.

Do You Need a Pennsylvania Personal Injury Lawyer?

Personal injury settlements can be life-changing, but they also raise complicated questions when you depend on disability benefits. Understanding the difference between SSDI and SSI, and planning accordingly, is the key to protecting both your recovery and your benefits.

If you have questions about how a settlement may affect your disability benefits, an experienced Pennsylvania personal injury lawyer at Edelstein, Martin, and Nelson can help. Call (215) 731-9900 today for a free consultation and protect both your compensation and your benefits.