The impact of a car accident settlement on disability benefits will depend on the type of benefits that you receive.
If you get Social Security Disability Insurance (SSDI) benefits, your settlement is unlikely to have an impact on them.
Meanwhile, if you receive Medicare benefits, you may have to use a portion of your settlement to reimburse the government program for certain injury-related medical costs.
Comparatively, if you are entitled to Supplemental Security Income (SSI) or Medicaid, your settlement could affect your eligibility for them moving forward.
What Is the Impact of a Car Accident Settlement on Social Security Disability Insurance Benefits?
Social Security Disability Insurance is an earned benefit based on your past work history and tax contributions. Because of this, a car accident settlement may have no impact on your disability benefits.
Generally, pain and suffering and other types of damages included in an auto accident settlement are untouched by SSDI.
What Is the Impact of a Car Accident Settlement on Medicare Benefits?
Medicare is an entitlement program rather than a needs-based program. As such, your car accident settlement may not cause you to lose your Medicare benefits.
After you get your car accident settlement, you may have to reimburse specific injury-related medical care expenses that were covered by Medicare. These expenses can be paid out of your settlement proceeds.
Medicare can only seek compensation for your medical expenses relating to injuries that the government program covered previously. It cannot touch settlement proceeds for your pain and suffering, lost wages, and other losses.
What Is the Impact of a Car Accident Settlement on Supplemental Security Income Benefits?
Supplemental Security Income is a needs-based program that limits your income and countable assets. If you get a car accident settlement, the SSA may count your settlement funds for the month that you receive them. In the months that follow, the administration may view them as an asset or resource. This may lead to a suspension of your SSI benefits.
What Is the Impact of a Car Accident Settlement on Medicaid Benefits?
If you are enrolled in Medicaid and receive an auto accident settlement that includes compensation for medical bills that were covered previously by government programs, you may have to repay these programs.
At this point, you may be subject to subrogation that may have to be resolved for your settlement funds to be distributed to you.
How to Protect Your Disability Benefits If You Receive a Car Accident Settlement
Those who receive needs-based disability benefits like SSI or Medicaid can take measures to legally protect the funds that they receive as part of a car accident settlement. Such measures can include:
- Establishing a special needs trust (SNT). Use an SNT to have a trustee manage your settlement funds. In this situation, you don’t have direct control of these funds, and if they are properly structured and administered, the SSA may not count them toward your disability benefit eligibility limits.
- Setting up an Achieving a Better Life Experience (ABLE) account. This is a tax-advantaged savings and investment account for people with disabilities. It allows these individuals to save money up to certain limits without losing their eligibility for SSI, Medicaid, and other federal benefits.
- Spending down your settlement funds. You can use your settlement funds on non-countable exempt assets, like buying a home, paying off debt, purchasing a car, or upgrading your house’s accessibility.
Outside of these things, a Boulder car accident attorney can account for your disability benefits as they help you negotiate your settlement.