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Does a settlement affect my disability income?

August 25, 2023
If you are receiving disability income in Texas and are involved in a legal settlement, it is important to understand how this may impact your benefits. In this blog post, we will explore the potential effects of a settlement on disability income for residents of Texas.

Understanding Disability Income

Before delving into the impact of settlements, let's first clarify what disability income entails. Disability income refers to financial assistance provided to individuals who are unable to work due to a qualifying disability. This assistance can come from various sources, such as Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI).

Impact of Settlements on Disability Income

When it comes to settlements, the effect on disability income depends on the specific type of benefit you receive.

1. Social Security Disability Insurance (SSDI)

If you are receiving SSDI benefits, a settlement generally does not affect your monthly payments. SSDI is based on your work history and contributions to the Social Security system. Therefore, any settlement you receive should not impact your eligibility or the amount you receive in SSDI benefits.

However, it is worth noting that if you receive a large lump sum settlement, the Social Security Administration (SSA) may consider it as income for the month in which you receive it. This could potentially affect your SSI benefits if you also receive them.

2. Supplemental Security Income (SSI)

Unlike SSDI, SSI is a need-based program that provides financial assistance to disabled individuals with limited income and resources. If you receive SSI benefits and receive a settlement, it can affect your eligibility and the amount you receive.

The SSA considers any income or resources you have when determining your SSI eligibility and payment amount. This includes settlements. If you receive a settlement, it is crucial to report it to the SSA promptly. Failure to do so may result in overpayments and potential penalties.

The settlement amount will be evaluated by the SSA, and they will determine how it affects your SSI benefits. In some cases, the settlement may result in a reduction or suspension of your SSI payments until the funds are appropriately spent.

Seek Professional Advice

Navigating the complexities of disability income and settlements can be challenging. It is always advisable to consult with a qualified attorney or disability advocate who specializes in these matters. They can provide personalized guidance based on your specific circumstances and ensure you make informed decisions.


In Texas, the impact of a settlement on disability income depends on whether you receive SSDI or SSI benefits. While SSDI benefits are generally unaffected by settlements, SSI benefits can be impacted. It is crucial to report any settlements promptly to the SSA and seek professional advice to understand how it may affect your eligibility and payment amount.

Remember, this blog post provides general information and should not be considered legal advice. Each case is unique, and consulting a professional is essential to address your specific situation.

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