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The Impact of a Car Accident Settlement on Disability Benefits

Posted on March 19, 2024

If you sustain car accident injuries caused by the negligent actions of another individual or entity, you should be able to recover compensation for your losses. You may be able to recover compensation through an insurance settlement, or you may have to file a civil personal injury lawsuit against the other party. Regardless, if your claim is successful, you need to know whether or not the damages you receive can affect your disability benefits.

Different Types of Disability Benefits

Before really delving into a conversation about how a car accident settlement could impact disability benefits, we need to define two different types of disability. The first of these is Social Security Disability Income (SSDI), and the second is Supplemental Security Income (SSI).

Social Security Disability Income (SSDI), and the second is Supplemental Security Income (SSI)

Individuals receive SSDI benefits when they have earned enough work credits over the course of their employment history. When individuals work and have taxes withheld from their paycheck, some of this goes to the Federal Insurance Contributions Act, or FICA, and this provides money to future SSDI payouts if individuals become disabled or unable to perform their job duties.

Individuals are eligible to receive SSDI if they have a disability or condition that is expected to last for one year continuously and the condition prevents them from obtaining gainful employment.

SSI is different in various ways. This is considered a “needs-based” program unrelated to work history. In other words, individuals do not have to pay something into the SSI system in order to receive guaranteed benefits if they become disabled. There are strict income requirements in order for individuals to receive SSI benefits.

How Could a Crash Settlement Affect Your Disability?

Because these two disability insurance programs have different qualifications, they are affected differently by any crash settlement you receive.

  • If you currently receive SSDI, then a vehicle accident settlement will not have any effect on your disability benefits.
  • If you receive SSI, your benefits could be impacted by a car accident settlement. You have to report any settlement income to the Social Security Administration, and this could place you over the threshold to receive this needs-based benefit. Even having assets as low as $2,000 could disqualify an individual from receiving SSI.

What Should You Do?

Individuals who receive disability benefits deserve compensation if they sustain car accident injuries caused by the negligent actions of another party. While we understand that you need to consider your disability benefits, the reality is that the compensation you receive through a settlement is likely needed to handle your medical bills, property damage expenses, and pain and suffering caused by the incident.

If you have any questions about your particular vehicle accident situation and the compensation you may receive, we encourage you to reach out to a Chicago car accident attorney who has experience handling complex vehicle accident claims in Illinois. There are ways for individuals to help preserve their disability benefits after sustaining an injury, including the possibility of a special needs trust. By establishing a special needs trust, a disabled individual may be able to prevent losing their SSI benefits.