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Supplemental Security Income Benefits and Personal Injury Settlements

The goal of most personal injury lawsuits is to make the injured plaintiff financially whole by requiring the person responsible for the injury to assume its associated costs. For a variety of reasons most personal injury disputes end up settling out of court. In filing suit the plaintiff makes claims for damages suffered in connection with the defendant’s negligence or other wrongdoing. Damages typically include medical bills and property losses. They also usually include lost earnings.

Plaintiffs who receive Supplemental Security Income, or SSI, can be surprised to learn that their personal injury settlement can affect their eligibility for continued payments under the SSI program. SSI is a program operated by the federal Social Security Administration that provides supplemental income to qualified individuals. To qualify an individual must, among other things, be disabled, blind, or over the age of 65. The individual must also “have limited income and resources.”

A straightforward cash payment as part of a personal injury settlement usually will push an individual out of qualifying under this second, asset-based requirement. An individual with qualified assets worth more than $2,000, or $3,000 for a married couple, is not eligible for SSI benefits. A significant number of personal assets are not included in this figure: the SSA does not count the value of a primary home, a vehicle, household goods, and business property. However, ordinary cash held in a checking or savings account does count toward the resources limit. As such, accepting a check in a settlement can instantly disqualify a plaintiff from continuing to receive SSI benefits.

The problem with this outcome is that the funds a plaintiff receives from a settlement generally need to be used straight away to pay off the costs associated with the plaintiff’s injuries. The settlement award is, therefore, not always a windfall but simply a way to pay down debts. If the award also renders the plaintiff ineligible for SSI benefits the effect can be the loss of significant and even vital monthly income.

One strategy for overcoming this problem is to create what is called a special needs trust to hold the settlement proceeds. Trusts are legal entities that are created by carefully preparing paperwork. The object of a special needs trust is to place strict limits on how the money in the trust can be used—in the case of an injury settlement, the usual purpose is to pay for expenses related to the plaintiff’s injury. By formally restricting how the plaintiff can use settlement funds a properly designed special needs trust can ensure that the settlement does not qualify as a “resource” that would disqualify the plaintiff for SSI benefits.

Problems like those faced by injured plaintiffs who receive SSI benefits are another good reason to work with an experienced personal injury law firm when pursuing a case. For more than 45 years the law firm of Greenman Goldberg Raby Martinez has represented Las Vegas clients in personal injury cases. If you receive SSI benefits and you have concerns about how your personal injury lawsuit may affect your eligibility, we are happy to discuss your case with you. For a free attorney consultation call 702-388-4476 or send us a request through our site.