One question we often receive from personal injury plaintiff attorneys is: “Will receiving a settlement impact SSDI or SSI benefits?” This is a critical issue in settlement planning, because the consequences depend entirely on which Social Security program your client is enrolled in. Before dispersing any settlement funds, you must confirm whether your client receives Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI)—two programs that sound similar but operate under very different rules. Understanding this distinction is essential, as SSI has strict income and asset limits that can be affected by a settlement, while SSDI generally is not.
Why Is It Important to Know the Distinction Between SSDI and SSI?
SSI eligibility is based on both income and assets, which means a client's SSI eligibility can be impacted when you send them a settlement check due to the income and asset limits imposed by SSI. For example, if a client receives a settlement check that puts their countable assets over the limit, then they will likely lose their SSI benefit (see our separate post on receiving settlement while on Medicaid). Additionally, if a client who is on SSI is also on Medicaid (which is typically the case), and they lose their SSI eligibility, then they are likely to lose their Medicaid eligibility as well.
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On the other hand, SSDI is an entitlement benefit that the client is eligible to receive because he or she has paid into the system through their payroll taxes over the years. So, if the client receives a personal injury settlement and the client is receiving SSDI and not SSI, then their SSDI benefit will not be affected.
In summary, if a client is receiving SSI, it is important to do some settlement planning before dispersing the settlement funds to preserve the client's SSI—and, potentially, Medicaid—benefits.
Otherwise, if SSDI is the only benefit your client is receiving and they will be a recipient of a settlement check, you can disperse the settlement funds without worrying about any impact it will have on their SSDI eligibility.
If you're not sure whether your client is receiving SSI or SSDI, or you and your client need expert guidance with government benefits planning, give us a call.
