Does a Personal Injury Settlement Affect Social Security Disability Payments?

If a disability has left you unable to work, you may be collecting social security disability (SSDI) payments. If negligence played a role in your injuries and you are considering filing a personal injury claim, will a settlement impact your ability to receive SSDI payments?  SSDI is a federally-funded program that provides disabled workers with a source of income if they cannot continue working. The general rule of thumb with SSDI is that you must report any wages you receive – even if those wages are extremely low. For example, if your disability prevents you from working your full-time job, but you take a five-hour-per-week shift at the local library, you must report those wages.

A personal injury lawsuit may result in a large settlement or court award. Does this payout need reported to SSDI? Although this compensation may be substantially greater than wages earned from a part-time job, there is one significant difference – settlements are not wages.

Exceptions to the Rule

A settlement is not considered to be wages unless part of that settlement is intended to compensate you for lost wages. Settlements can be comprised of multiple parts, including pain and suffering, medical expenses, and lost wages. If compensation for lost wages is part of your settlement, you will need to report this amount to SSDI as such. A skilled disability insurance lawyer can help you determine what percentage, if any, of your settlement is compensation for lost wages. Furthermore, if you receive punitive damages or interest of any kind, these forms of compensation may also be considered income. A skilled attorney can help you navigate this exceedingly complex area of the law. Contact a Boston disability insurance lawyer today.

The Flip Side

Will SSDI payments affect your settlement? The short answer is, maybe. Multiple factors are taken into consideration when determining the size of a personal injury settlement or court award. Income is one of those factors. Let’s say a high-wage earner makes about one-million dollars annually. If she misses a day of work due to an SSDI-covered injury, that day of lost wages may be worth nearly $3,000. If she misses ten days, she may lose closer to $30,000. If this individual is on SSDI, her personal injury settlement will not include lost wages because SSDI is already covering her lost wages. Therefore, her settlement may be $30,000 less than she expected.


What’s the difference between SSDI and SSI? SSI stands for Supplemental Security Income, another federal program that provides supplementary income to elderly and disabled individuals who are already collecting SSDI or standard social security benefits. This is a need-based program, and a personal injury settlement or court award can have a direct impact on SSI benefits. With the help of a skilled disability insurance lawyer, you can determine how a personal injury settlement may affect your current SSI or SSDI payments. Contact a Boston personal injury lawyer today.

Altman & Altman, LLP – Disability Insurance Law Firm Serving Boston and the Surrounding Areas

If you are collecting SSDI payments as a result of a disability, and are considering filing a personal injury claim, the skilled legal team at Altman & Altman, LLP can help. We have been protecting the rights of MA workers for more than 50 years. Our knowledgeable attorneys have extensive experience with these types of cases, and an impressive track record of obtaining compensation for our clients. Contact Altman & Altman, LLP today for a free and confidential consultation about your case.

Contact Information