If you've just been approved for disability benefits after a long wait, that lump sum of back pay can feel like a lifeline—but spending it wisely requires understanding the rules that apply to your specific situation.
In this article, we'll cover:
- The difference between SSDI and SSI back pay rules
- Why SSDI recipients have more spending flexibility
- The nine-month spend-down period for SSI recipients
- Smart ways to use your back pay without losing benefits
- How ABLE accounts can help you save long-term
The Short Answer
For SSDI recipients, yes—you can generally use your back pay however you want. For SSI recipients, however, there are important restrictions you need to understand to avoid losing your benefits.
SSDI Back Pay: More Flexibility
SSDI is based on your work history and the taxes you've paid into the Social Security system. Because it's not a needs-based program, there are no asset limits or spending restrictions on your back pay. You can save it, invest it, pay off debt, or make a large purchase without worrying about affecting your ongoing benefits.
That said, if you also receive means-tested benefits like Medicaid, SNAP, or housing assistance, a large lump sum could affect your eligibility for those programs. It's worth checking with your local benefits office before making any major financial moves.
SSI Back Pay: Proceed With Caution
SSI is a needs-based program with strict asset limits. As of 2025, individuals cannot have more than $2,000 in countable resources, and couples cannot exceed $3,000. Your back pay could easily push you over these limits.
The good news is that SSA provides a nine-month "spend down" period after you receive your back pay. During this time, the lump sum itself doesn't count against your resource limit. However, once nine months pass, any remaining funds will count—and if you're over the limit, your SSI benefits will stop.
Smart Ways to Use SSI Back Pay
If you're on SSI, consider using your back pay for expenses that won't count as resources afterward. Paying off debt, covering medical expenses, making home repairs, or purchasing necessary household items are all options that can improve your quality of life without jeopardizing your benefits.
Another powerful option is opening an ABLE account, which allows you to save up to $100,000 without affecting your SSI eligibility. This gives you a place to set aside funds for disability-related expenses while maintaining your benefits.
Plan Ahead to Protect Your Benefits
Whether you're on SSDI, SSI, or both, it's wise to think carefully about how you'll use your back pay. For SSI recipients especially, having a plan in place before the money arrives can help you avoid accidentally losing the benefits you depend on.
Managing disability benefits shouldn't be complicated. Purple offers a checking account designed specifically for SSI and SSDI recipients, with built-in tools to help you track your resources and stay compliant. Open your account today at Purple.