A car accident settlement does not affect Social Security Disability Insurance (SSDI). However, it can reduce or end Supplemental Security Income (SSI), Medicaid, and BadgerCare, because those programs limit how much income and assets you can hold at one time.
Contact our car accident lawyer in Milwaukee for a free case consultation today.
SSDI and SSI Follow Different Rules
SSDI is an earned benefit funded by the FICA contributions you paid while working. Because it is not a needs-based program, a car accident settlement will not lower your monthly payment or disqualify you, no matter how large it is, and you are not required to report it.
SSI is a means-tested benefit. To stay eligible, your countable resources must remain at or below $2,000 as an individual or $3,000 as a couple. Settlement proceeds usually count toward that limit, so a payout can suspend or terminate your checks. If you receive both SSI and SSDI, the SSI rules will take precedence.
Medicaid and BadgerCare Are Also at Risk
Medicaid and BadgerCare apply the same kind of financial test that SSI does, so a settlement can push you past the eligibility threshold and interrupt your health coverage. Depending on the size of your award, coverage may be reduced or dropped until your resources fall back within the allowable range.
If you receive SSI or Medicaid, you must notify the Social Security Administration within 10 days after the end of the month in which the settlement arrived, and alert your state Medicaid agency separately, since it sets its own deadlines. Delays can lead to overpayment demands, penalties, or a lapse in coverage.
Options That Preserve Your Eligibility for Benefits
Accepting a settlement does not have to mean giving up the benefits you rely on. Federal and state law recognize several arrangements that let you hold and spend your recovery without it counting against you.
The right approach depends on the size of your award, your age, and the ongoing care your injuries require. Your options may include:
- A first-party special needs trust, which holds your settlement under a trustee who pays approved expenses on your behalf
- A structured settlement or annuity, which spreads your award across scheduled payments so that no single month pushes you over the income limit
- A spend-down, which converts funds into resources that are not counted toward the SSI limit, such as paying off debt, buying a home, or making accessibility modifications
You must arrange these protections while your claim is still open, before the insurer issues payment. Otherwise, the funds land in your name as a countable resource, and your benefits can stop before you have a chance to redirect the money.
A Wisconsin Car Accident Attorney Can Help Protect Your Benefits
If you are planning to file a car accident insurance claim or personal injury lawsuit, you need to incorporate benefit planning from the start. At Cannon & Dunphy S.C., our Milwaukee personal injury attorney can assess your situation and structure the settlement to preserve the payments that your household depends on. Schedule a free case review today to learn more about your options and protect your financial future.