How a Personal Injury Settlement Can Impact Social Security Disability

Christian Worstell
In this article...
  • Social Security Disability Income and Social Security Income can involve complex application processes. Find out whether settlement from personal injury claims can impact your financial eligibility.
A view of the bottom of a medical gurney being loaded into the back of an ambulance

If you qualified for Social Security Disability Income (SSDI) but then became injured and want to move forward with a civil claim or lawsuit, you may be wondering how a settlement will impact the funds you receive from SSDI. The truth is, a settlement is unlikely to have a significant impact on SSDI, but it can directly affect SSI. 

Do I Have to Tell Social Security if I Get a Settlement?

Yes, a settlement amount must be reported to the Social Security Administration within 10 days of being received. However, a Social Security Disability payment and a personal injury settlement should not directly affect each other. Receiving a settlement should not impact your SSDI benefits because it doesn't qualify as income, which SSA considers when deciding what you're eligible to receive.

This differs from SSI (Social Security Income), where lawsuit settlements count towards the eligibility threshold. If the settlement amount you receive puts you over the qualifying amount, it could cause you to reduce or lose SSI benefits. 

How Does a Lump Sum Settlement Affect Social Security Disability?

If your settlement is a workers' compensation settlement from public sources, this might affect your SSDI. In the event that the public settlement amount combined with your SSDI is greater than 80% of what you earned prior to your disability, then the amount you receive from Social Security Disability will likely be reduced to make sure the amount is less than 80% of your previous earnings. 

This is not the case with a private settlement where the lump sum payment doesn't come from a public source. In that case, it won't count as part of your earnings and should have no impact on your SSDI. 

What Is the Average Payout for Social Security Disability?

The average SSDI payout in 2023 is roughly $1259, but this amount can typically range from $800-$2000. The amount you receive monthly is determined from an average of your earnings in the years before the disability began. This takes into account your whole employment history.

To access information on your entire history of earnings, you can look at your annual Social Security statement. Look at the Estimated Benefits section to see how much you're likely to receive. 

The disabled person's family may also be eligible to receive SSDI benefits. Qualifying family members include a spouse or divorced spouse, a child, a disabled child or a grown-up child who became disabled before 22.

Keep in mind that some disabilities are classified as severe, and you will automatically receive benefits, but most require a thorough screening process. There is also a five-month wait period from the disability's onset before you can actually begin receiving any benefits. 

For a condition to be labeled as severe, it must interfere with your work and daily activities. If you have a condition for five months and are still not capable of returning to life as normal, you may qualify for SSDI. 

What Is the Average Payout for a Personal Injury Claim?

Some personal injury claims might settle for only a couple thousand dollars, but the average can actually fall anywhere between $3,000 and $75,000.

It can be challenging to determine the value of your personal injury claim, and you should seek the guidance of a professional, typically a personal injury lawyer, to help you with the process. They will be able to assess the types of economic and non-economic damages that can be used in your claim. 

Before selecting a personal injury lawyer, do your research and take advantage of the free initial consultation many law firms offer. This lets you see if the firm and its attorneys are the right fit for you.

If you're financially struggling and concerned about the cost of a lawyer, check out the American Bar Association website for lawyers who are willing to work pro bono. Social Security Disability and personal injury settlements might not have a direct effect on each other, but when dealing with a personal injury settlement, you should always confirm its effect on your SSDI where applicable.

Summary of Social Security Disability and a Personal Injury Settlement 

On the whole, personal injury settlements are unlikely to impact your SSDI, but they can directly affect other government sources of income like SSI. Make sure to check out the official website of whatever benefits you are receiving to find out if the amount you qualify for will be impacted by assets as well as income. 

Hiring a personal injury lawyer is an important decision that can help you financially in the long run. Carry out thorough research and select a reputable attorney to move forward with your personal injury claim. 

Christian Worstell
About the Author

Christian Worstell is a senior Medicare and health insurance writer with He is also a licensed health insurance agent. Christian is well-known in the insurance industry for the thousands of educational articles he’s written, helping Americans better understand their health insurance and Medicare coverage.

Christian’s work as a Medicare expert has appeared in several top-tier and trade news outlets including Forbes, MarketWatch, WebMD and Yahoo! Finance.

While at HelpAdvisor, Christian has written hundreds of articles that teach Medicare beneficiaries the best practices for navigating Medicare. His articles are read by thousands of older Americans each month. By better understanding their health care coverage, readers may hopefully learn how to limit their out-of-pocket Medicare spending and access quality medical care.

Christian’s passion for his role stems from his desire to make a difference in the senior community. He strongly believes that the more beneficiaries know about their Medicare coverage, the better their overall health and wellness is as a result.

A current resident of Raleigh, Christian is a graduate of Shippensburg University with a bachelor’s degree in journalism. You can find Christian’s most recent articles in our blog.

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