When people are injured or become disabled, they might need help making ends meet as they can no longer work. You might have several options for compensation, including lawsuits, Workers’ Compensation claims, and Social Security disability benefits, among others. If you receive a lump sum settlement for your injuries, it might interfere with other benefits, like SSDI. However, receiving a settlement does not make someone ineligible for SSDI.
While you are likely still eligible for SSDI if you receive a lump sum settlement, it might reduce some of your SSDI benefits. SSDI benefits often cover a portion of lost wages. Your lump sum settlement might do the same. You cannot recover duplicate compensation for lost wages and income, so your SSDI benefits might be reduced. An attorney can help you make sure you get the most out of each option and do not unnecessarily lose benefits or compensation.
For a free review of your case to get started, call (479) 316-0438 and speak to our Arkansas disability benefits lawyers.
Will a Lump Sum Settlement Affect Your SSDI Benefits in Arkansas?
According to 20 C.F.R. § 404.1505(a), you must have a disability that prevents you from working and performing “substantial gainful activity” to be eligible for SSDI benefits. Your disability must be expected to last for at least 1 year or end in death. People who meet these criteria have often been badly injured and might take other legal action to get compensation. For example, they might have filed a personal injury lawsuit and accepted a lump sum settlement. A lump sum settlement should not disqualify you from filing for SSDI benefits, but it might complicate things.
SSDI benefits are not based on financial need. The fact that you might have agreed to a lump sum settlement for your injuries does not make you less eligible for SSDI benefits. Instead, SSDI benefits are based on whether your condition meets the definition of a disability mentioned above and your inability to perform substantial gainful activity. If you meet these criteria, you can receive SSDI benefits no matter how much money you have in the bank.
While you are still eligible for SSDI even if you previously accepted a lump sum settlement, you should speak to our Arkansas disability benefits lawyers about how the settlement might affect your claims moving forward. As discussed below, you may not receive duplicate compensation for things like lost wages.
How Workers’ Compensation Might Affect Social Security Disability in Arkansas
The combination of lump sum settlements and SSDI benefits is not terribly uncommon, as many injured workers sue for damages or file a Workers’ Compensation claim before applying for SSDI benefits. Since SSDI benefits are not based on financial need, a settlement usually does not affect SSDI benefits.
However, if your lump sum settlement is from a Workers’ Compensation claim, you might not be able to receive the full value of your SSDI benefits. Workers’ Compensation is designed to cover various injuries and damages, including lost income from being unable to work. Generally, people cannot recover duplicate compensation for lost wages.
Since Workers’ Compensation and SSDI benefits both cover lost income and wages, they might overlap with each other. Usually, this means that any excess compensation is taken out of SSDI benefit payments. According to the SSA, your total benefits for lost earnings may not exceed 80% of your average current income. If your lump sum settlement through Workers’ Compensation and SSDI benefits exceeds this limit, your SSDI benefits may be reduced.
How to Protect Your SSDI Benefits if You Have Other Compensation in Arkansas
Talk to your lawyer about whether you can maximize your settlement options and SSDI benefits. If possible, you might be able to minimize any reduction in benefits because of your lump sum settlement.
One option is to forego a lump sum settlement in favor of a structured settlement. While a lump sum payment is a single, often large, payment, a structured settlement is paid in multiple installments over time. If you agree to a structured settlement where payments are made over several years, you might minimize your monthly payments so that your SSDI benefits are not reduced.
Another option is to have your attorney include an amortization provision in your Workers’ Compensation settlement. This provision means that the settlement would be paid out over the course of your life expectancy, not all at once. Depending on your age, this might be many years of much smaller monthly installments. If the installments combined with your SSDI benefits do not exceed 80% of your average monthly income, you do not have to reduce anything.
Is a Lump Sum Settlement or SSDI Benefits a Better Option in Arkansas
Discuss your options for compensation with your lawyer to determine which one is right for your case. Accepting a lump sum settlement through Workers’ Compensation might be extremely helpful and give you a major influx of some much-needed money. However, if you can no longer work due to your disability, you might also want to explore long-term benefits like SSDI. You might accept one or both forms of compensation, but check with a lawyer to see if there are any drawbacks or disadvantages.
For some, a lump sum settlement might be all they need, especially if they do not qualify for SSDI benefits. However, if your ability to work is permanently hindered, a lump sum settlement might run dry in the coming years. In such a case, SSDI benefits that might last indefinitely might be the better option.
You might be able to have it both ways. Your attorney can help you determine if accepting both forms of compensation might reduce the value of SSDI benefits. If so, your lawyer can also help you maximize your compensation. Ultimately, it is up to you which option is better.
Contact Our Arkansas Disability Benefits Lawyers for Assistance
For a free review of your case to get started, call (479) 316-0438 and speak to our Washington County disability benefits lawyers.