An award is usually something received as the result of a decision by a court, board of arbitration, or the like. Awards may also be referred to as settlements. Awards or settlements may be received through various payment arrangements, such as a single lump sum payment, periodic payments, and deposits to trusts.

An award is unearned income subject to the general rules pertaining to income and income exclusions.

When evaluating income treatment of an award or settlement, consider whether the award or settlement meets the definition of income and whether income exclusions apply. Examples of situations where we may not count the full award or settlement amount as income include (but are not limited to) the following:

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  The award or settlement includes an expense that was essential in obtaining it, such as attorney fees or medical costs. If an award or settlement is received for damages in connection with an accident, we may subtract from the payment the amount of medical, legal, or other essential expenses connected with the accident (see SI 00830.100 for more information);

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  The award or settlement includes cash or an in-kind item for the repair or replacement of a resource that has been lost, damaged, or stolen (see SI 00815.200 for more information);

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  The award or settlement is specifically excluded by a federal law. Note: The chart in SI 00830.099B includes several examples of settlements excluded under federal law; or

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  The award or settlement is paid directly into a special needs trust (SNT) or pooled trust account that is not a countable resource (see SI 01120.201 and SI 01120.203 for more information on trusts).

Use documents in the individual's possession or contact with the court, board, source, etc. to verify:

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  the amount of the award;

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  the payment date; and,

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  if needed, the purpose(s) of the payment (e.g., part of the payment is reimbursement for medical expenses).

Determine the nature of the award and apply the appropriate rules pertaining to income and income exclusions.

An SSI recipient is awarded $100,000 by an insurance company as a lump sum payment in connection with a claim for damages from a car accident. From the total award, the insurance company pays $15,000 to the recipient for the total loss of their vehicle and $30,000 to the recipient for medical expenses resulting from the accident. We can deduct $15,000 of the award as cash for the repair or replacement of a damaged resource and $30,000 as medical expenses essential to obtaining the award. The remaining $55,000 of the award, which represents payment for lost wages and pain and suffering, is countable unearned income when received and a resource beginning the month following the month the settlement is received.

As a member of a class action lawsuit, an SSI recipient is awarded a $50,000 settlement to cover personal injury and damages. As part of the settlement order, the court establishes accounts in a pooled trust for individuals receiving public assistance. The court further orders that the settlement be disbursed into the trust accounts through quarterly payments of $2,500 over a 5-year period. Provided the SSI recipient’s pooled trust account is not a countable resource, the settlement payments are not income when deposited into the trust accounts or a resource.