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Does a Personal Injury Settlement Affect SSDI or SSI in Michigan?

If you’ve been hurt in a Michigan car crash, slip-and-fall, or another accident caused by someone else’s negligence, a personal injury settlement can help cover medical bills, lost income, and other damages. But if you’re receiving or thinking about applying for Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI), that settlement money could raise important questions about your ongoing benefits.

The rules differ significantly between the two programs. Here’s a clear breakdown tailored for Michigan residents.

SSDI: Generally Unaffected by a Personal Injury Settlement

SSDI is an insurance-style benefit earned through your work history and payroll tax contributions (FICA or SECA). It’s not based on your current income or assets.

  • A personal injury settlement (whether a lump sum or structured payments) does not reduce, pause, or eliminate your SSDI monthly checks.
  • You do not need to report the settlement to the Social Security Administration (SSA).
  • Your linked Medicare coverage also remains unchanged.

Even if you’re already on SSDI when the injury happens, the settlement won’t impact your payments. However, being on SSDI (and often not working) can sometimes limit the size of a personal injury award, as it may exclude claims for lost future wages. Insurance companies might also push back harder if they argue a pre-existing condition contributed to your injuries. Working with an attorney experienced in both personal injury and disability law helps maximize your recovery while keeping everything protected.

If you’re not yet receiving SSDI, a serious Michigan injury might qualify you if it prevents substantial gainful activity (SGA) and is expected to last at least 12 months or result in death. 

Many people successfully pursue both a personal injury claim and an SSDI application at the same time.

SSI: Often Reduced or Eliminated by a Settlement

SSI is a needs-based program for people who are disabled, blind, or 65+ with very limited income and resources. Unlike SSDI, assets and income directly affect eligibility.

  • A personal injury settlement counts as a resource. Receiving it can push you over SSI’s strict limits (generally $2,000 for an individual or $3,000 for a couple), leading to reduced monthly payments or complete loss of SSI.
  • Medicaid (often tied to SSI in Michigan) is usually affected too, which can create major gaps in healthcare coverage.
  • For 2026, the federal maximum SSI payments are $994 per month for an individual and $1,491 per month for a couple (Michigan may add a small state supplement in some cases).

You must report the settlement to SSA within 10 days of receiving it to avoid overpayment issues or penalties.

How to Protect Your SSI Benefits: The Special Needs Trust Option

The good news? You can often shield your settlement and preserve SSI (and Medicaid) by placing the funds into a first-party Special Needs Trust (also called a d4A trust under federal law).

  • A properly drafted Special Needs Trust is managed by a trustee who uses the money for your supplemental needs (e.g., extra medical care, adaptive equipment, transportation, recreation) without counting as your personal asset.
  • SSA does not treat trust assets as yours for eligibility purposes.
  • In Michigan, these trusts must follow specific state and federal rules, including payback provisions to Medicaid upon your passing.

Setting up a Special Needs Trust requires careful planning, ideally before the settlement is finalized, so consult an attorney familiar with Michigan disability and trust law early in the process.

MiABLE Accounts: Another Option for Eligible Individuals

Another option that may be available to some Michigan residents is a MiABLE account.

The MiABLE Disability Savings Program allows individuals with disabilities to save funds for expenses that support health, independence, and quality of life without jeopardizing eligibility for benefits such as SSI, Medicaid, SNAP, and certain housing programs.

Who Is Eligible for a MiABLE Account?

An individual may be eligible if they became disabled or blind by age 46 and either:

  • Are currently entitled to SSDI or SSI, or

  • Have a qualifying disability certification.

Will I Lose My Benefits If I Use a MiABLE Account?

No. The law allows people with disabilities to maintain these accounts for disability-related expenses without losing eligibility for SSI, Medicaid, or certain other public benefits.

Quick Comparison for Michigan Claimants

  • SSDI → Settlement has no effect → No reporting required  
  • SSI → Settlement can reduce or end benefits → Must report within 10 days → Special Needs Trust can protect eligibility  
  • SSI + Planning → Special Needs Trust and/or MiABLE account may help preserve eligibility

Why This Matters in Michigan

Michigan’s no-fault auto insurance system and local courts can influence personal injury outcomes, while SSA rules apply nationwide. Coordinating your injury claim with any disability benefits is key to avoiding surprises. A substantial settlement might cover things SSDI/SSI doesn’t (like pain and suffering, home modifications, or long-term care), providing better long-term security.

If you’re dealing with a recent injury settlement or wondering how to handle both claims, reach out for personalized guidance. From our offices in Lansing and Livonia, we fight to protect our clients’ benefits and seek the full compensation they deserve.

Ready for answers specific to your situation? Contact us for a free consultation today