No, lottery winnings do not affect your social security disability benefits (SSDI). But it can reduce or totally cut your Supplemental Security Income (SSI).
That’s because SSDI is an earned benefit. You got it because you paid social security taxes and have proven that you are disabled. SSI, on the other hand, is a needs-based benefit. It’s paid to disabled individuals who have limited income and resources, and haven’t paid enough social security taxes.
As such, non-work related earnings like lottery winnings do not count as income under SSDI. While an SSI recipient’s financial capacity will obviously be improved if they win the lottery. This means they are not anymore in need of aid from the government.
If you’re receiving SSI, your benefits may stop temporarily. But it can resume again once your resources have fallen below the SSA’s income limit.
What Counts as Income Under SSDI?
SSDI benefits are given on the assumption that your disability prevents you from working. If you get back to work and are earning more than the SSA’s limit, you are considered to be engaged in a Substantial Gainful Activity (SGA). When this happens, your SSDI benefits will stop.
This is why if you’re receiving SSDI benefits, the SSA won’t care about your unearned assets. It only takes into account income earned from working which includes:
- wages
- honorarium
- earnings from self-employment
- workers compensation
- other government benefits
- pensions from private insurance providers
Unearned income such as gambling winnings, dividends, interests, and spousal income is not counted as SSDI income.
How Is SSI Income Calculated?
For SSI purposes, the SSA defines income as:
anything you receive during a calendar month and can use to meet your needs for food or shelter. It may be in cash or in kind.
This explains why lottery winnings are considered income if you are receiving SSI. You can use it to buy food, pay for rent, and any other necessities.
But not all earnings count as income under SSI. The SSA only takes into account the “countable income”. This is the leftover earnings after weeding out non-income items and applying the appropriate exclusions.
How About Your Retirement Benefits?
Just like SSDI, social security retirement benefits are earned benefits. As such, winning the lottery will have no impact on your retirement benefits.
Should I Report My Winnings?
Yes, you should. It doesn’t matter if you’re receiving 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 earnings for the month.
If you’re receiving SSI, then 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. As such, you will have to return all the SSI payments you received during the time you are not eligible for SSI.
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About The Author
Judy Ponio is a writer and editor for the Victor Malca Law P.A. website and blog. She enjoys helping people in need with questions about social security disability and workers compensation law. She has a passion for helping those in need and the elderly with accurate legal information that can make a positive difference in their lives.