A lump-sum payment is a one-time only payment such as an insurance settlement, a lawsuit settlement, an inheritance, lottery winnings, or retroactive Social Security Disability benefits (not SSI) which is received while on public assistance.
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. DSS requires that you report a lump sum as soon as you receive it.
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. If you are working with an attorney, make sure they are knowledgeable in public assistance rules! It is important to call us before you receive the lump sum payment in order to possibly avoid penalties. The consequences can be dire!
What happens if you receive a lump sum while on public assistance or apply for public assistance after you received and spent a lump-sum payment?
Do the rules on lump-sum payments 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 SSI benefits paid to you or your children. Please feel free to call our office if this applies to you.
How will my public assistance be affected if you receive a lump-sum payment?
If you get a lump sum payment, you may be allowed to keep a portion of the lump sum which together with your other countable resources does not go over the $2000resource limit ($3,000 if the household includes a member 60 or over).
Any remaining amount will be counted toward your public assistance in the month that you get the lump sum.
If the remaining amount is still more than your public assistance, you have a choice:
If I keep the lump-sum payment, how long will my case be closed?
DSS expects you to live off the lump sum at the same rate as if you were on public assistance. So the money will first apply to the $2000 resource limit, then the rest against your monthly needs. This will cause the case to close for a certain period of time. This closure period is figured by dividing the lump sum (in the month you receive it) by your monthly public assistance for your household. That period will be called the lump-sum disqualification period.
Is there a way to reduce this ineligibility period?
Yes, but you must show DSS documentation that you spent the money on one or more of the following within 90 days of receipt of the lump sum:
Are there other circumstances and changes that can shorten the ineligibility period?
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 charge you for the public assistance overpayment.
Does the lump-sum payment affect eligibility for Food Stamps (S.N.A.P.)?
There is no lump sum income rule for the Food Stamp program. That means that there is no Food Stamps penalty due to the receipt of a lump sum payment. Households that were receiving cash public assistance and Food Stamps but lose their eligibility for public assistance due to the receipt of a lump sum payment, must have their eligibility for Food Stamps determined separately. Usually, those households that were in receipt of public assistance will have very low income and are categorically eligible for Food Stamps. For those households that are categorically eligible for food stamps, resources (the lump sum payment) do not count.
Does a lump-sum payment affect your eligibility for Medicaid?
Those households who lose their eligibility for public assistance due to the receipt of a lump sum payment must have their eligibility for Medicaid determined separately. The general rule under the Medicaid program for lump-sum payments is that it is considered to be income in the month received. Additionally, the disabled and elderly have a resource limit (e.g. a single disabled Medicaid recipient is allowed $13,800 in resources). Non-disabled families and individuals do not have a resource limit in determining Medicaid eligibility. The rules concerning Medicaid eligibility can be very confusing. If you receive a notice from your DSS caseworker proposing to discontinue your Medicaid because you received a lump sum payment, please call our office.
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