Nassau/Suffolk Law Services Committee, Inc.

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Lump Sum Income

A lump-sum payment is a one-time only payment such as an insurance settlement, an inheritance, lottery winnings, or retroactive Social Security benefits.

When should I notify the Department of Social Services (DSS) that I expect to receive or have received a lump-sum payment?

From the time you first apply for public assistance and for as long as you receive it, you must report all of your income and any changes to it. That means that as soon as you find out that you will receive a lump-sum payment, you should tell your worker. When you apply and when you recertify, your worker will give you a booklet that explains your duty to report changes. This booklet will also explain the lump-sum rule.

What happens after I tell DSS that I have received or expect to receive a lump-sum payment?

Your worker will tell you that you have some choices.

What are those choices?

If the amount of the lump sum is less than the public assistance you receive for one month, it will be treated as income for the month in which you receive it. This means that your grant for one month will be reduced by the amount of the lump sum.

If the lump sum is more than you receive in public assistance for one month, you have two choices:

1. You may choose to turn the lump sum over to DSS. If you do this, your benefits will continue uninterrupted.

2. You may choose to keep the lump-sum payment. In this case, it will be budgeted against your needs, and your case will be closed for a certain period of time. This period is figured by dividing the lump sum (in the month you receive it) by the monthly public assistance grant for your household. That period will be called the lump-sum disqualification period.

For example, if you receive a lump-sum payment of $5,000, and monthly public assistance for your household is $500, DSS would divide $5,000 by $500, or 10. Your household would be ineligible for public assistance for 10 months.

When does DSS start counting the lump-sum payment as income?

In the month you receive it. If you received the lump sum in August, but did not report it until October, DSS will have overpaid you more public assistance than you were entitled to.

What happens if my situation changes while I am not entitled to receive public assistance?

The time you are ineligible for public assistance can be shortened. Several examples are given below:

1. Something happens which, if you were still getting public assistance, would change the amount of your grant, (for example, you become pregnant or give birth to a child).

2. Some or all of the lump sum becomes unavailable to you (for example, it is stolen, in which case be sure to make a police report).

3. The person who received the lump sum has left your household.

4. Your family is faced with life-threatening circumstances.

5. You have had unusually high household expenses, such as increases in heat or shelter costs.

6. A family member has medical expenses during your ineligible period.

What should I do if I am expecting a lump sum?

If you are expecting a lump-sum payment, call us immediately and we will review your options with you.

What happens if you apply for public assistance after you received and spent a lump-sum payment?

1. If you had a public assistance case open when you got the lump sum, you cannot get another case opened until your lump sum disqualification period is over.

2. If you did not have a public assistance case open when you got the lump sum, you should not be denied because of the lump sum.

If you are applying for Safety Net benefits, you will have to show how you supported yourself before you sought public assistance. DSS will make you prove that you spent all the money. You should keep your receipts.

Do the rules on lump-sum payment apply to everyone in my household?

No. Rules on lump-sum payments only apply to individuals in your household who receive public assistance. If someone in your household receives a lump sum, but that person is not part of your public assistance case, it will not count against you.

Also, special rules apply to retroactive disability benefits paid to children. Please feel free to call our office if this applies to you.

Does a lump-sum payment count against my Food Stamps?

The lump sum will disqualify you from Food Stamps for the month in which you receive it, and any money over $2,000 that is not spent will be counted as a resource and may make you ineligible while it remains in your possession. If your Food Stamps have been discontinued by a notice from your public assistance worker because of receipt of a lump sum, call our office. Also, for information on Food Stamps and resources, feel free to call our office.

Does a lump-sum payment count against my Medicaid benefits?

If you receive Family Assistance benefits, the lump sum will not disqualify you from Medicaid for the month in which you received it, but any money that remains may be counted as a resource for the next month. If you receive Safety Net benefits, the lump sum is counted as income in the month you receive it and is counted as a resource for the next month. If you receive a notice from your public assistance worker discontinuing your Medicaid benefits because of a lump sum, call our office. For information on Medicaid and resources, also feel free to call our office.

Are answers available if I have questions about lump-sum payments?

Yes. The rules on lump sums are very complicated. If you have questions, please feel free to call our office.

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