A severe car accident carries financial burdens as well as physical pain and mental anguish for injured persons. Receiving a car accident settlement can alleviate some or all financial burden and reduce stress, allowing injured victims to focus on recovery and rehabilitation. Yet, accepting a settlement after a car accident can also affect your supplemental security income (SSI) and Medicaid benefits. Learning how a settlement will impact your benefits and your options for protecting those benefits, will ensure you get the best possible outcome for your situation.
If you need immediate assistance concerning the loss of your SSI or Medicaid benefits, contact the experienced SSI lawyers at Thurswell Law at (248) 354-2222 for a free consultation to discuss the details of your case. Continue reading for an in-depth understanding of why your SSI and Medicaid benefits can be affected by a car accident settlement.
What Is SSI?
The federal Supplemental Security Income (SSI) program pays monthly benefits to disabled adults and those over age 65 with limited income, as well as children. Those who apply cannot have more than $2000 in resources ($3,000 for a couple). The Social Security Administration (SSA) does not count your house, the land it’s on, your personal effects, and household items as resources. You can see a full list here. When you receive a settlement or verdict in your favor which pushes you over the maximum of $2,000 or $3,000, your SSI benefits might be terminated. Hiring a qualified SSI attorney is the best way to ensure you don’t have to choose between a settlement for damages from a car accident and your SSI benefits.
What Is the Difference Between SSI, SSDI, and Social Security Income?
The Social Security Administration (SSI) provides benefits to people in three different ways, and a personal car accident settlement impacts each one differently.
- Social Security income is based on the Social Security payroll tax paid during a person’s working years. Once an individual reaches a certain age, they receive a monthly amount from the SSA. If you are receiving Social Security Income, a car accident settlement will not impact these payments.
- Social Security Disability Income (SSDI) is provided to those who have a severe permanent disability preventing work. The SSA does not view SSDI as earned income, so if you are receiving these payments, a car accident settlement should not impact them.
- Supplemental Security Income (SSI) is need-based aid and calculations depend on a person’s or household’s resources and income, as discussed above. If the proper actions are not taken, it’s likely you will lose benefits after accepting a settlement from a car accident.
What Is Medicaid?
Medicaid is government-subsidized healthcare coverage for low-income adults, children, pregnant women, and those with disabilities. Each state administers its own Medicaid program. Michigan typically determines Medicaid eligibility based on an individual’s income, specifically their modified adjusted gross income (MAGI). Limits, which are tied to the federal poverty level, vary based on whether the recipient is a child, a pregnant woman, or an adult. Yet, some individuals are exempt from income requirements for Medicaid. Additionally, federal law requires that certain groups receive mandatory coverage under Medicaid; those who receive SSI automatically receive Medicaid coverage.
Medicaid is a need-based program, so it’s likely your car accident settlement will cause you to lose your benefits; however, solutions exist to avoid potentially avoid this pitfall. Also, small to medium settlement amounts might not impact Medicaid, unless the settlement puts you over a certain percentage of the federal poverty level. Your SSI attorney can evaluate your situation and determine exactly how your benefits might be affected based on the amount of your settlement.
What Is the Difference Between Medicaid and Medicare?
Medicare is health insurance subsidized by the federal government. Unlike Medicaid, which is an assistance program, Medicare is not based on income. Those over age 65 and disabled persons under age 65 receive Medicare regardless of income; however, Medicare recipients must pay a small premium, some hospital bills, and copays. Because Medicare is not an assistance program, and income doesn’t play a role, accepting a car accident settlement will not impact your eligibility for benefits.
How Can I Protect My SSI and Medicaid Benefits?
An individual’s financial situation and the amount of a settlement will determine the best way to protect SSI and Medicaid eligibility. Two popular options include spending down settlement proceeds and creating a special needs trust. Spending settlement money to keep SSI and Medicaid benefits is typically associated with small settlement amounts. Yet, many rules are associated with spending down settlement money. For example, you must spend your settlement money the same month as you receive it. In addition, you can only spend money on things which the SSA will not count as resources to push you above the threshold.
If you are expecting a considerable lump sum of money for a car accident settlement, your best bet might be to create a special needs trust. The Social Security Administration (SSA) has many rules about trusts. Further, Michigan law and federal law have several rules about the way in which you can spend money in the trust. Timing is of the essence. In fact, you must create your trust before accepting any settlement.
Contact a Michigan SSI Lawyer to Protect Your Benefits
After a severe car accident, you shouldn’t have to choose between accepting a settlement for damages or keeping your SSI and Medicaid benefits. In most cases, you can keep your eligibility for these need-based assistance programs as long as you plan ahead. The extensive rules surrounding these types of programs make it difficult to know exactly what to do when faced with additional income. Let an experienced SSI lawyer navigate the complex waters to protect your benefits, so you can receive the full and fair compensation you deserve from your car accident.
Contact our skilled legal team at Thurswell Law at (248) 354-2222 or email us for a free consultation to learn about the best path forward for your situation. We proudly help injured and disabled persons throughout Michigan.
