Will my settlement affect my government benefits?



Many public assistance programs that provide you with monthly income or payments for medical services have strict financial eligibility limits. Without careful planning, your settlement award may cause you a reduction or even loss of your benefits for a period of time.

Your settlement should NOT affect your eligibility for Social Security Disability Income (SSDI) or Medicare because SSDI and Medicare offer benefits based on work history, not income or financial resources. But, if you receive any of the following needs-based benefits, your settlement may affect your eligibility and could cause a lapse or termination of your benefits:

  • SSI (Supplemental Security Income): A cash benefit that provides assistance to the aged, blind or disabled.
  • Medicaid: Medical coverage provided to the disabled and needy. In many states, disabled people who receive SSI will also automatically qualify for Medicaid.
  • SNAP Food Assistance: State/county program that assists low income individuals and families in purchasing food.
  • Subsidized Housing (HUD/ Section 8): Assists with rent/housing costs.

You will likely lose your needs-based public assistance benefits for a period of time if you accept a lump sum payment that causes you to exceed the program’s income and resource limits. Likewise, if you give away part of your settlement as a gift or donation, you could also lose your SSI and/or Medicaid benefits for at least a time. Or, the government could seek reimbursement for benefits you’ve received.

Please note that you must report any settlement you receive to your caseworker within 10 days of receiving the funds.