Is settlement reportable?

[dad1216]

I am to receive the first payment next week on a settlement from a botched treatment.  I am on SSDI, Medicare, and Medicaid.  The settlement is all compensatory damages.  The first is 75k cash, and a 100k structured which doesn't start paying until 2028 (like I will be around for that)...and the final payment will be a million in July of next year.  My attorney says this is all non-taxable, however doesn't know how it will affect my SSDI and such.  Any ideas
Thanks
Bob

[denb45]

The way I understand this is, you won't loose your SSDI or Medicare, cause your still disabled, however your SSDI may be reduced by 1/2 or more, and you can kiss your State Medicaid goodbye, but you won't need any of that anymore, all of this is something a friend of mind went thur a few yrs. back, so you can expect something similar to that affect    anyway Congrats and good luck w/ you settlement 

[JR Gabbard]

I'm not sure exactly what the answer is to your question.  You need to consult with a local attorney who understands SSA rules.  But SSDI is not means-tested, meaning that the settlement should not affect your eligibility to be receiving benefits, nor the amount of your benefit.  Compensatory damages are not income--defined by the IRS as "the undeniable accession to wealth over which the recipient has custody and control"--because they are not new wealth, rather you are being paid back for something you lost.  Even though it may feel like you hit the jackpot.
Your benefit might become taxable, however.  If you have income over a certain amount, 1/2 of your yearly benefit becomes taxable income.  This is the part you need to speak to a knowledgeable local attorney about.
Medicaid is means-tested, and your settlement will probably put you over the assets limits for that program.  In other words, if the state is paying your Medicare premium, you would have to start paying it yourself.  SSA deducts it from your monthly benefit check.