Winning the lottery is an exciting and life-changing event, but if you’re receiving Social Security benefits, it’s important to understand the financial impact.
Whether on Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI), lottery winnings can affect your benefits differently. While SSDI benefits remain unaffected by non-work-related income like lottery winnings, SSI is a needs-based program, and any additional income could potentially reduce or suspend your support. Knowing how these programs handle lottery payouts can help you make informed decisions and avoid surprises.
Keep reading to learn how lottery winnings may influence your Social Security benefits and what steps you should take to protect your financial future.
WHAT HAPPENS IF YOU WIN MONEY WHILE ON BENEFITS?
Winning money, like a lottery prize, can affect your social security benefits depending on the type you receive.
If You Receive SSDI
If you’re on Social Security Disability Insurance (SSDI), you’re in the clear—lottery winnings don’t impact your benefits since SSDI is based on your work history, not financial need. You’ll still need to report the winnings, but they won’t affect your payments.
If You Receive SSI
For those receiving Supplemental Security Income (SSI), it’s a different story. SSI is needs-based, so winnings count as income or resources. If your total income exceeds the program’s limits, your benefits may stop temporarily. Once your resources drop below the allowed amount, you could qualify again.
Regardless of your benefit type, reporting your winnings to the Social Security Administration (SSA) is essential to avoid complications. Remember, winnings might also affect other programs like Medicaid or SNAP. When in doubt, consult an expert to protect both your winnings and your benefits!
Why Lottery Winnings Won’t Affect SSDI
Lottery winnings don’t impact SSDI benefits because SSDI only considers earned income, not unearned income when determining eligibility. Here’s a quick breakdown:
Earned Income (impacts SSDI):
- Wages from a job
- Self-employment earnings
- Honorariums
- Workers’ compensation
- Other government benefits or private pensions
Unearned Income (does NOT impact SSDI):
- Lottery winnings
- Gambling earnings
- Dividends or investment returns
- Interest from savings
- Spousal income
SSDI focuses on whether you’re earning money through work (Substantial Gainful Activity or SGA). Since lottery winnings aren’t work-related, they don’t count toward the SSA’s income limit. However, you should still report lottery winnings for tax purposes, as they could affect other means-tested programs like Medicaid or SNAP.
HOW LOTTERY WINNINGS CAN AFFECT YOUR SSI BENEFITS
The Social Security Administration (SSA) defines income as anything you receive during a calendar month that can be used for your food or shelter needs. This includes both cash and non-cash earnings, including lottery winnings, which count as income under SSI.
KEY RULES FOR SSI INCOME AND LIMITS:
- SSI is a needs-based program designed for individuals with limited income and resources.
- For 2023, the maximum income allowed is:
- $914 per month for individuals.
- $1,371 per month for a married couple.
- The maximum monthly benefits you can receive under the SSI program are these limits.
- Any other income you receive, including lottery winnings, will reduce or completely offset your benefits for that month.
HOW LOTTERY WINNINGS AFFECT SSI:
- Lottery winnings are treated as countable income for the month you receive them.
- If your total income (lottery winnings plus any other earnings) exceeds SSI’s monthly limit, you will not receive SSI payments for that month.
- For example, winning $2,000 in a lottery will count toward your income for that month, likely suspending your benefits.
WHAT HAPPENS AFTER THE LOTTERY MONTH?
One key feature of SSI is that income and resources are evaluated monthly. Once your income or resources fall below the allowable limit, you can resume receiving SSI benefits.
Example Scenario:
- If you spend $2,000 in lottery winnings on home repairs within the same calendar month, it will no longer be considered part of your resources the next month.
- Your SSI payments could start again if you have no additional income or resources.

HOW ABOUT YOUR RETIREMENT BENEFITS?
Social Security retirement benefits are earned through your work history and contributions, so lottery winnings don’t affect the amount you receive. However, lottery winnings are taxable and must be reported to the IRS.
This extra income could push you into a higher tax bracket, increasing the taxes you owe on your retirement benefits.
Report all winnings and consult a tax professional to understand the potential impact on your overall finances.
SHOULD I REPORT MY WINNINGS?
Yes, you should. It doesn’t matter if you receive SSI, SSDI, or retirement benefits.
Lottery winnings are reported to the IRS and, in turn, will be seen by the SSA. If you do not report and explain the source of this income, it might get you into trouble with the SSA. Worse, they may count it as part of your monthly earnings.
If you’re receiving SSI, that’s all the more reason to report your lottery winnings. When the IRS informs the SSA of your lottery earnings, you may get charged with overpayment. You must return all the SSI payments you received in the months you are not eligible for SSI.
IF YOU WIN THE LOTTERY, DO YOU HAVE TO PAY BACK MEDICAID?
Winning the lottery generally doesn’t require you to pay back Medicaid costs. However, it can affect your eligibility for Medicaid, as eligibility often depends on income levels, which vary by state. You might lose your benefits if your lottery winnings push your income above the Medicaid threshold.
CAN MY SOCIAL SECURITY BENEFITS STOP PERMANENTLY IF I WIN THE LOTTERY?
For SSI, benefits could stop while your resources are above the limit. Once your total resources drop below the threshold, you may qualify again. SSDI benefits remain unchanged regardless of your winnings.
SHOULD I CONSULT SOMEONE AFTER WINNING THE LOTTERY WHILE ON BENEFITS?
Absolutely. Consulting a legal or financial expert can help you understand the implications of your winnings and manage your benefits effectively.
VICTOR MALCA – Florida Workers Compensation & Social Security Disability Attorney
Victor Malca P.A. has over 27 years of litigation experience in Workers Compensation and Social Security Disability lawsuits. His experience and continued success when fighting for his clients puts him among the most trusted workers’ compensation attorney’s in Florida. He specializes in representing injured workers on compensation benefit cases and disabled individuals claiming lost social security disability benefits.
Book a free consultation today. Our unwavering advocacy for employee rights and privileges are recognized by our past clients across South Florida.
About The Author
Meet writer Rei Bayucca, a graduate of Saint Louis University with a passion for writing about legal topics. Explore insightful articles tailored to solve your most pressing issues. Rei’s expertly crafted content is thoroughly researched and fact checked.