According to the Social Security Administration (SSA), 75 million Americans rely on Social Security and Supplemental Security Income (SSI) in 2026. These benefits also increased by 2.8 percent due to cost-of-living adjustments (COLA) in 2026. Many victims rely on these benefits before becoming injured in accidents. These victims might wonder how a personal injury settlement will affect their Social Security eligibility. Does a settlement of this nature fall under the definition of “income” according to SSA rules? This is a question victims might want to raise with experienced personal injury attorneys in Minnesota.
Betz & Port, P.A. has spent over five decades representing injured victims of all types, including those with pre-existing disabilities and health issues. Compared to online research, an in-depth discussion with a lawyer could provide more personalized guidance for those with questions about Social Security eligibility. Begin this discussion by contacting Betz & Port, P.A. at (763) 323-6911. We serve victims throughout Minnesota.
Some Social Security Benefits Are Affected by Personal Injury Settlements
Personal injury settlements impact some Social Security benefits, but not all. The Social Security Administration states that “countable income” is the leftover amount of money a victim has each month after paying for food and shelter. SSA rules also outline several excluded forms of income that do not “count” for eligibility purposes, but personal injury settlements are not among these exclusions. However, SSA rules carve out an exemption for any money a patient sets aside for “achieving self-support.” Aside from income, assets or “resources” also impact Social Security eligibility. When a victim receives a personal injury settlement, the balance of their bank account may disqualify them from certain needs-based programs. One notable exemption concerns trusts, which opens the door to trust-based strategies for victims who receive personal injury settlements.
Summary of How Personal Injury Settlements Affect Social Security Eligibility
Personal injury settlements can affect eligibility for certain needs-based government benefits, particularly Supplemental Security Income (SSI) and Medicaid, because these programs consider income and financial resources when determining eligibility.
- Personal injury settlements may count as financial resources under Social Security Administration (SSA) rules, potentially pushing recipients above income or asset limits for needs-based programs such as SSI.
- SSI eligibility may be lost if income exceeds approximately $2,073 per month or if non-exempt assets exceed $2,000, thresholds that many personal injury settlements easily surpass.
- Medicaid eligibility may also be affected because the program uses income and asset limits, meaning a settlement could place an individual above the allowable thresholds for coverage.
Betz & Port, P.A. serves injured clients in Minnesota through both the legal process of a claim and the aftermath that follows.
How Do Personal Injury Settlements Affect SSI?
Personal injury settlements can affect eligibility for Supplemental Security Income (SSI). Because SSI is a needs-based program, the SSA will consider the resources and income of each applicant. Since a personal injury settlement can exceed both income and resource limits, this can easily result in loss of benefits. These benefits include monthly cash payments and automatic qualification for Medicaid.
The SSA states that as soon as a victim earns more than $2,073 per month, they lose access to these benefits. A normal personal injury settlement will easily exceed this amount, automatically triggering a loss of benefits. The SSA also states that an individual applying for SSI cannot have more than $2,000 in non-exempt assets. A personal injury settlement will almost certainly cause the bank balance of a victim to exceed $2,000, thereby disqualifying them on those grounds as well.
How Does a Personal Injury Settlement Affect Medicaid?
Medicaid is another needs-based program that many Americans rely on. Victims with pre-existing conditions or low income may have qualified for this program before their accidents. A subsequent personal injury settlement could disqualify them from this program, preventing access to numerous benefits. These benefits include doctor appointments, emergency treatment, prescription drugs, long-term care facilities, mental health counseling, and more.
Like SSI, Medicaid is not available to those above certain income or asset levels. Medicaid rules in 2026 state that the maximum possible income an applicant can earn per month is about $3,000 per month in 2026. For many applicants, this number will actually be significantly lower. A patient may also lose access if they have more than $3,000 in assets, although this number may increase for married couples. A personal injury settlement can easily exceed these limits and cause victims to lose access to Medicaid. Specific eligibility rules for Medicaid change fairly regularly, and it may be worth speaking with Betz & Port, P.A. for more up-to-date information.
A Special Needs Trust Can Maintain Your Eligibility
With proper legal guidance, victims can access their injury case without losing Social Security eligibility. To achieve this goal, victims frequently establish special needs trusts or Medicaid Asset Protection Trusts (MAPTs). When a victim transfers assets into a trust, they cease to be the legal owner of those assets. As a result, these assets no longer “count” for eligibility purposes when applying for needs-based programs. However, this strategy only works with certain types of trusts. SSA and Medicaid clearly state that not all trust assets/income are exempt, and it makes sense to work with an experienced lawyer when implementing trust-based strategies.
MAPTs and special needs trusts are associated with strict rules. Victims may need to establish these trusts within certain timelines in order to prevent issues with Social Security eligibility. In this scenario, many victims choose to qualify for SSI with a special needs trust. Because SSI qualification automatically makes most patients eligible for Medicaid, there is no need to worry about the slightly different eligibility requirements associated with Medicaid (including the five-year lookback period). That said, it makes sense to create a special needs trust as soon as possible after recovering a personal injury settlement.
Learn More About Personal Injury and Social Security Eligibility With Betz & Port, P.A.
The term “Social Security” may refer to a range of benefits under the general SSA umbrella. While a personal injury settlement may not affect certain Social Security benefits (like Social Security Disability Insurance), compensation could potentially affect access to needs-based programs like SSI and Medicaid. Each case is unique, and online research may fail to provide the kind of targeted guidance victims need. Those who rely on Social Security benefits should proceed carefully, weigh the pros and cons of each option, and consider strategies that maintain Social Security eligibility.
Although victims often feel unsure about how to proceed in this situation, many others have dealt with similar issues in the past. Experienced personal injury attorneys in Minnesota are often well aware of this conundrum, and they can suggest potential solutions like special needs trusts. Expand on this conversation by contacting Betz & Port, P.A. at (763) 323-6911. Our law firm is conveniently located in Bloomington, and we serve Minnesota victims from all walks of life.
Frequently Asked Questions About Social Security Eligibility and Personal Injury Settlements
Read further to learn more about the impact of personal injury settlements on social security eligibility.
Do Personal Injury Settlements Count As Income For Social Security Benefits?
Personal injury settlements are not always treated the same as ordinary monthly income, but they may still affect eligibility for certain needs-based programs. The Social Security Administration evaluates both income and financial resources when determining eligibility for programs such as Supplemental Security Income (SSI). When a settlement increases an individual’s available resources, it may influence whether benefit limits are exceeded.
How Can A Personal Injury Settlement Affect Supplemental Security Income (SSI)?
SSI is a needs-based program that considers both income and available financial resources. If a settlement increases monthly income or raises total assets above program limits, eligibility for SSI benefits may be affected. In many cases, a large settlement may temporarily or permanently place an individual above the allowable thresholds.
What Asset Limits Apply To SSI Eligibility?
The Social Security Administration generally limits non-exempt assets for SSI applicants to $2,000 for individuals, although certain assets may be excluded from this calculation. Because personal injury settlements often increase the balance of bank accounts or other financial holdings, these funds may cause individuals to exceed resource limits. Exceeding these limits may result in a suspension or loss of benefits.
Can A Personal Injury Settlement Affect Medicaid Eligibility?
Medicaid is another needs-based program that uses income and asset thresholds to determine eligibility. A personal injury settlement may increase financial resources beyond the limits allowed by Medicaid rules. When this occurs, individuals may temporarily lose access to healthcare services covered by the program until eligibility requirements are met again.
What Is A Special Needs Trust And How Can It Help Preserve Benefits?
A special needs trust is a legal structure that may allow certain assets to be held in trust rather than counted as personal resources. When structured according to applicable rules, funds placed in this type of trust may not be counted toward eligibility limits for some government benefit programs. These trusts must follow strict requirements to ensure compliance with Social Security and Medicaid regulations.
What Is A Medicaid Asset Protection Trust (MAPT)?
A Medicaid Asset Protection Trust is another legal tool sometimes used to manage assets while maintaining eligibility for needs-based benefits. When assets are transferred into a qualifying trust, the individual no longer holds direct ownership of those assets. As a result, the funds may not count toward certain asset limits, depending on how the trust is structured and when it is established.
When Should A Trust Be Created After Receiving A Personal Injury Settlement?
Timing may be important when establishing trusts intended to protect eligibility for needs-based programs. Certain rules and deadlines may apply, particularly when Medicaid eligibility is involved. Creating a trust promptly after receiving a settlement may help reduce complications related to income or asset limits.