What happens to my disability benefits if I have a lottery win?

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Q. I received a lottery win and in 30 days, it was all gone. I didn’t report it to disability. I used it to pay off debt and I have seven kids. Disability wants me to pay benefits back, saying it overpaid me. I gave them proof of where all the money went and they still want me to pay them back. What should I do?
— Out of money

A. Congrats on your lottery win.

As you have seen, certain kinds of income can have an impact on certain kinds of benefits.

If you’re collecting Social Security Disability Income (SSDI), lottery winnings do not affect those payments, said Steven Gallo, a certified public accountant and personal financial specialist with U.S. Financial Services in Fairfield.

However, if you are getting Supplemental Security Income (SSI), you could have a problem, he said.

“The collection of SSDI is the result of the Social Security tax you paid while working and is basically an insurance policy,” Gallos said. “Once you were declared legally disabled, Social Security Disability Insurance is triggered, and the only way that can be taken away is if your physical condition improves to a point where you are able to go back to work.”

However, SSI is an entitlement program which pays disabled individuals an additional sum based solely on their financial condition, therefore winning the lottery can be deemed a significant change in your situation and you can be required to pay back any funds determined to have been paid in error, Gallo said.

If, however, you are collecting disability from a private provider, you would have to look to the underlying policy itself to determine how your lottery winnings would affect your benefit as each private carrier has their own rules and requirements, Gallo said.

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This story was originally published on Oct. 5, 2022.

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