Will a Lawsuit Settlement Affect My SSDI?
When considering a lawsuit settlement, many individuals with disabilities who rely on Social Security Disability Insurance (SSDI) often wonder if the proceeds from the settlement will impact their SSDI benefits. This is a common concern, as SSDI benefits are designed to provide financial support for those who are unable to work due to a disabling condition. Understanding how lawsuit settlements may affect SSDI benefits is crucial for those who are contemplating legal action or have already received a settlement.
Firstly, it’s important to note that SSDI benefits are based on a person’s earnings history and are not affected by personal assets or investments. However, lawsuit settlements can be considered as a one-time windfall, which may temporarily affect SSDI benefits. According to the Social Security Administration (SSA), any monetary awards or settlements received as a result of a personal injury claim may be counted as income and could potentially impact SSDI benefits.
Under the SSDI program, income is categorized into two types: earned income and unearned income. Earned income includes wages from a job or self-employment, while unearned income encompasses pensions, annuities, and other monetary benefits, including lawsuit settlements. The SSA considers unearned income when determining if a person’s SSDI benefits should be reduced or suspended.
When a lawsuit settlement is received, the SSA will review the amount and type of settlement to determine if it should be counted as unearned income. If the settlement is considered unearned income, it may lead to a reduction or suspension of SSDI benefits. However, the SSA may also take into account the nature of the settlement and the individual’s overall financial situation when making this determination.
There are some exceptions to the rule that may protect SSDI benefits from being affected by a lawsuit settlement. For example, if the settlement is received as a result of a personal injury claim and is used to pay for medical expenses related to the injury, it may not be considered as unearned income. Additionally, certain types of settlements, such as workers’ compensation, may be exempt from counting as unearned income.
It’s advisable for individuals with SSDI benefits who are contemplating a lawsuit settlement to consult with an attorney who specializes in SSDI and Social Security law. An experienced attorney can help navigate the complexities of the SSDI program and ensure that their client’s benefits are protected. Additionally, the SSA provides a helpful publication titled “Can I Get Both Workers’ Compensation and Social Security Disability Benefits?” that can provide more information on how these benefits may interact.
In conclusion, while a lawsuit settlement can potentially affect SSDI benefits, it is not an automatic outcome. Understanding the rules and exceptions surrounding SSDI and lawsuit settlements is essential for those who are considering legal action or have already received a settlement. Seeking professional advice can help ensure that SSDI benefits are protected and that individuals with disabilities continue to receive the financial support they need.
