Does Personal Injury Compensation Affect My Government Benefits?

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Last modified on November 8, 2023

Personal injury compensation is designed to help those who the negligence or wrongdoing of others has harmed. It provides financial compensation for victims’ damages, including medical expenses, lost wages, and pain and suffering. However, many people wonder if receiving compensation for a personal injury can affect their benefits.

The short answer is: It depends. The impact of personal injury compensation on benefits can vary depending on the type of benefits you receive. Here, we will further explore the relationship between personal injury compensation and benefits.

Types of Benefits

There are many different types of benefits that people may receive, including:

  • Social Security Disability Benefits
  • Supplemental Security Income
  • Medicare
  • Medicaid
  • Workers’ Compensation Benefits
  • Veterans’ Benefits
  • Private Disability Insurance
  • Long-term Care Insurance

The impact of compensation on benefits will depend on the type of benefits you receive.

Social Security Disability Benefits

Social Security Disability Benefits (SSDI) is a form of disability insurance the federal government provides. If you are eligible for SSDI, you may be able to receive benefits if you are unable to work due to a disability. The amount of your benefits will depend on your average earnings prior to becoming disabled.

According to federal tax rules, personal injury compensation typically does not count as taxable income as long the compensation is related to physical injury. For example, compensation for medical bills and emotional distress directly tied to physical injury does not count as income. However, if the emotional distress is unrelated to the physical injury, it will likely count as income. Therefore, if a personal injury award counts as income, it can affect income-based benefits.

SSDI benefits are not based on income. Because of this, compensation should not affect SSDI.

Supplemental Security Income

Supplemental Security Income (SSI) is a needs-based program that provides financial assistance to those who are disabled and have limited income and resources. If you receive SSI benefits, personal injury compensation could impact your benefits.

If any part of the compensation you receive qualifies as income, it could reduce or eliminate your SSI benefits because the government gives SSI benefits according to a person’s income and disability.

Medicare and Medicaid

Medicare and Medicaid are federal and state-funded healthcare programs that cover medical expenses. Medicare is based on a person having worked and paid into Social Security over the years. It is not income-based, so personal injury compensation should not affect it. However, a monetary award could affect this benefit since Medicaid is need-based.

Workers’ Compensation Benefits

Workers’ Compensation Benefits are provided to employees injured or ill due to work. If you receive workers’ compensation benefits and also receive personal injury compensation, it is possible this could impact your benefits.

The impact of personal injury compensation on workers’ compensation benefits will depend on the laws in your state. In some states, workers’ compensation benefits may be reduced or eliminated if you receive compensation. In other states, workers’ compensation benefits may be unaffected.

Veterans Benefits

Veterans’ Benefits are provided to veterans injured or ill due to their service. If you receive veterans benefits and also receive personal injury compensation, it is possible that it could impact your benefits.

The impact of personal injury compensation on veterans’ benefits will depend on the type of benefits you receive. Some veterans’ benefits, such as pension benefits, may be reduced if you receive compensation that counts as income. Other veterans’ benefits, such as disability compensation, may be unaffected because they are not based on income.

Private Disability Insurance

Private Disability Insurance is a form of insurance that provides financial compensation if you cannot work due to a disability. If you receive private disability insurance and also receive personal injury compensation, it is possible that it could impact your benefits.

The impact of personal injury compensation on private disability insurance benefits will depend on the terms of your policy. Some policies may allow for a reduction in benefits if you receive personal injury compensation, while others may not.

Long-term Care Insurance

Long-term Care Insurance is a form of insurance that provides coverage for the cost of long-term care, such as nursing home care. It could impact your benefits if you receive long-term care insurance benefits and personal injury compensation.

The impact of compensation on long-term care insurance benefits will depend on the terms of your policy. Some policies may allow for a reduction in benefits if you receive personal injury compensation, while others may not.

Contact Murphy Crantford Meehan Today

The impact of personal injury compensation on benefits will depend on the type of benefits you receive. Understanding the potential impact of compensation on your benefits is important before you accept a settlement or award.

If you are unsure how personal injury compensation may impact your benefits, speaking with an experienced attorney is important. The attorneys at Murphy Crantford Meehan have the training and support staff to take on the most complex personal injury cases. We are dedicated to finding the best solution for each client’s needs and will not back down from a fight. Our experienced trial lawyers can help you understand the impact of compensation on your benefits and help you navigate the legal process.

Contact us today for a review of your case.

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