How A $25K Car Crash Settlement Could Leave This Mom Without SSI For Years

A mother who depends on Supplemental Security Income is now facing a long suspension of her benefits — all because of a car accident settlement that didn’t turn out the way anyone expected.

Contents

SSI Has a Hard Cap on What You Can Own Why Giving the Money Away Isn’t the Solution The Right Way to Spend Down the Money If You’re in a Similar Situation

According to a post shared in the r/SocialSecurity forum on Reddit, the woman was awarded $25,000 from a 2021 car accident. But after years of delays, legal fees, and Medicaid reimbursement, she only received a little over $8,000 — and not until early this year.

Despite that, the post says the Social Security Administration is treating it like she had the full $25,000 in her bank account since 2021. That misunderstanding has now left her without her monthly SSI benefits — and trying to figure out what to do next.

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SSI Has a Hard Cap on What You Can Own

SSI is designed to help people with low income and limited resources, but those resources are tightly monitored. In order to stay eligible, SSA rules say you can’t have more than $2,000 in countable assets if you’re single — or $3,000 for couples.

Countable resources include things like cash, bank account balances, stocks, property (other than your primary home) and most other items that can be sold or converted to money. One-time payments, like a settlement or inheritance, count toward that limit.

Even if you only have the money temporarily, going over the resource cap — even for just one day — can make you ineligible for that month’s SSI payment.

Why Giving the Money Away Isn’t the Solution

The Reddit user asked whether giving the remaining $8,000 to family members or grandchildren would help her mom qualify for SSI again.

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Unfortunately, it doesn’t work that way. Giving away money while on SSI is considered a “transfer of resources,” and the SSA can penalize you by suspending benefits for up to 36 months. That’s because transferring assets for less than their full value — including gifts — is seen as an attempt to bypass the resource limit.

One Reddit commenter put it bluntly: “Who in their right mind gives away $8,000 when they’re poor? Don’t you think SSA will be asking this same [question]?”

The Right Way to Spend Down the Money

There is a path forward — but it requires careful documentation. To get back on SSI, the woman needs to show that she spent the $8,000 on allowable expenses and didn’t just hand it off or stash it.

Some suggestions from commenters included:

Buying a new car or repairing an old one
Paying for a full year of car insurance
Making necessary home repairs
Purchasing household items, groceries, or medical supplies
Replacing furniture or essential appliances

The key is to spend the money in a traceable way — ideally through a bank account, with receipts — so the SSA can clearly see where the money went.

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If You’re in a Similar Situation

Getting a settlement, back pay, or other lump sum while on SSI can be tricky. Here are a few tips to stay on the right side of the rules:

Report the money to SSA immediately
Don’t withdraw it all in cash — use a bank account to create a paper trail
Spend down the funds carefully, only on necessary items
Keep receipts and records of everything
Don’t gift the money to others — it could result in a longer suspension

Even a relatively small windfall can lead to serious consequences if handled the wrong way. For those relying on SSI, it’s essential to understand how one-time payments can affect eligibility — and to plan carefully to protect your benefits.

Read Next: The average American couple has saved this much money for retirement — How do you compare?

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