*** The Health Care Programs Manual (HCPM) has been replaced by the Minnesota Health Care Programs Eligibility Policy Manual (EPM) as of June 1, 2016. Please refer to the EPM for current health care program policy information. ***
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Effective: April 1, 2013 |
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20.25.15 - Lump Sum Income |
Archived: June 1, 2016 (Previous Versions) |
Lump sum income is irregularly or infrequently received income. It can be earned or unearned income. Whether lump sum income is counted when determining income eligibility depends on what is received, how often it is received, and the health care program for which the person is eligible. Examples of lump sum income include:
l Winnings (lottery, gambling).
l Insurance settlements.
l Worker's Compensation Settlements.
l Inheritances.
l Retroactive payments of RSDI, VA, and Unemployment Insurance. See RSDI and SSI for information on how to count lump sum payments of RSDI and SSI.
l Gifts. See Gift Income for information on how to count gift income.
This section discusses lump sum policy in general by program, but will separately address lump sums of RSDI and SSI benefits, and other special circumstances related to federal benefits. More information is available in Budgeting Lump Sum Income.
MA Method B, MA-EPD, Medicare Savings Programs, and Long-Term Care.
Portion of Lump Sums Not Counted.
RSDI and SSI Lump Sum Payments.
SSI, RSDI, and VA Payment Due to Representative Payee Misuse of Benefit.
Medicare Part B Reimbursements.
Exclude lump sum income that is either irregular or infrequent.
l Income is irregular if it is not possible to anticipate receiving it.
l Income is infrequent if it is received less often than annually.
Note: Some lump sum income may be taxable. Do not subtract lump sum income that is included within the Adjusted Gross Income when calculating self-employment income based on 1040 tax forms. Request an alternative form of self-employment income verification from self-employed applicants or enrollees who indicate that the Adjusted Gross Income shown on the tax form does not reflect their current income because a lump sum they received in that tax year will not be received in the current year.
Example:
Randolph receives a cost of living adjustment to his wages effective July 1. He receives a retroactive payment for July and August on his September 1 paycheck.
Action:
Exclude the portion of the paycheck that covers the retroactive pay increase.
Example:
Enrollee wins $4,000 at a casino.
Action:
Exclude the winnings as income.
Example:
Ray is a self-employed farmer and applies for MinnesotaCare. He submits his taxes as proof of income. The taxes show an Adjusted Gross Income (AGI) of $150,000. Ray reports $140,000 under capital gains. Ray further clarifies that the $140,000 was from an inheritance. Ray states that the AGI on his tax form does not reflect his current income, because he does not expect to receive an inheritance this year.
Action:
Request an alternative form of self-employment income verification from Ray.
Count all lump sum income that is not a gift.
Exceptions: Do not count the portion of lump sum income used to pay for certain expenses. See Portion of Lump Sums Not Counted below.
Do not count the first $10,000 of court-ordered Worker’s Compensation settlements.
MA Method B, MA-EPD, Medicare Savings Programs, and Long-Term Care
Exclude the first $30 of irregular or infrequent earned income. Exclude the first $60 of irregular or infrequent unearned income. Count all other earned or unearned irregular or infrequent income that is not a gift.
l Income is irregular if a person cannot reasonably expect to receive it.
l Income is infrequent if a person receives it only once during a calendar quarter from a single source and did not receive it in the month immediately preceding that month or in the month immediately after that month, regardless of whether or not these payments occur in different calendar quarters.
n A single source of earned income is an employer, a trade, or a business.
n A single source of unearned income is an individual, a household, an organization or an investment.
l Income need only be irregular or infrequent to qualify for this exclusion. It does not need to be both irregular and infrequent.
l These income exclusions apply to the combined total of earned or unearned income of all people whose income is being considered.
Example:
Betsy earned $38 for babysitting a neighbor's child when the child’s parent had an emergency.
Action:
Betsy earned this income by providing a service. Exclude the first $30 of this income because it is irregular and count the remaining $8 in her income calculation.
Exception: Do not count the portion of lump sum income used to pay for certain expenses. See Portion of Lump Sums Not Counted below.
Portion of Lump Sums Not Counted
Some lump sum income that is used to pay for certain expenses is not counted. Do not count the following income for MA-Method A, MA-Method B, Long-Term Care, MA-EPD or MSP (MinnesotaCare does not count any lump sum):
l Costs associated with getting the lump sum, such as attorney's fees.
l Any portion of the lump sum earmarked for and used to pay medical expenses not covered by insurance or any Minnesota Health Care Program, such as a prosthetic device. See Excluded Income and Gift Income.
Example:
George has an artificial limb and receives MA through the CADI waiver. He would like to replace his artificial limb with a new model that is considered experimental and is not covered by Minnesota Health Care Programs or private insurance. His aunt gives him $8,000, the exact cost of the new limb, with written instructions that he use it for that purpose.
Action:
Disregard the lump sum if George uses it to buy the new experimental artificial limb.
l Any portion of the lump sum recovered by the DHS Benefit Recovery Section (BRS).
l Any portion of the lump sum earmarked for and used to pay funeral and burial costs paid upon the death of a spouse or child.
RSDI and SSI Lump Sum Payments
When RSDI or SSI benefits are first approved for clients, they often receive a one-time payment for payments that are retroactive back to their date of disability. These RSDI and SSI payments are lump sums.
Whether this type of lump sum is counted or excluded depends on the client’s health care program, and what type of income the client is receiving.
l MinnesotaCare.
Exclude retroactive RSDI and SSI payments received for a previous period as income or an asset.
Example:
Roland is enrolled in MCRE. On his annual renewal due for December, he reports that he was approved for RSDI. He received a retroactive lump sum payment of $3,000 in October covering the months of May-October. He will receive $950 per month beginning in November.
Action:
Do not count the $3,000 in determining his eligibility or premium amount for the new eligibility period because it is a one-time payment and will not be received during the next 12 months.
l MA Method A.
n SSI recipient:
Exclude retroactive lump sum payments of SSI and all other lump sum income (including RSDI) of a SSI recipient even if the lump sum is a retroactive payment for a period for which the SSI recipient received MA.
Exception: Count any portion of an RSDI lump sum payment designated as dependent benefits as unearned income to the dependent in the month received.
n Non-SSI recipient:
m Count retroactive lump sum RSDI payments for clients who do not receive SSI as unearned income in the month received and an asset in the following month if retained.
l MA Method B, MA-EPD, Medicare Savings Programs, and Long-Term Care.
n Count retroactive RSDI lump sum payments as unearned income in the month received.
Note: See the subtopic Income Changes in this chapter for more details on how a lump sum affects eligibility.
See Lump Sum Payment of RSDI and SSI for policy on treatment of lump sums as an asset.
n Exclude retroactive lump sum payments of SSI as income and assets in the month received.
n Any retroactive SSI or RSDI lump sum payment received before March 2, 2004 is excluded as an asset for a specific number of months, if retained after the month of receipt.
Note: See Excluded Assets for detailed information on the number of months the amount can be excluded.
SSI, RSDI, and VA Payment Due to Representative Payee Misuse of Benefit
This policy applies only to Method B.
A client’s SSI, RSDI or Special Veterans Benefits for the Elderly may be reissued when an individual Representative Payee of 15 or more beneficiaries or an organization Representative Payee misuses benefits.
Note: See Excluded Assets - Program Provisions for more information on how long this payment is excluded as an asset.
l SSI.
Exclude the re-issuance as income.
l RSDI and Special Veterans Benefits for the Elderly.
n Count the re-issuance as income in the month received if the original payment was not used to determine eligibility.
n Exclude the re-issuance if the original payment of the income was used in determine the eligibility.
Medicare Part B Premium Reimbursements
This policy applies only to Method B. A client’s Medicare Part B premium could be reimbursed if they are opened on retroactive SLMB. CMS sends a reimbursement check to the client after they receive the payment from the State for those retroactive months.
Determining if a Medicare Part B Reimbursement is counted or excluded is based on whether or not the client is using an LTC budget.
l Non-LTCF enrollees:
n Count this lump sum as income in the month received if the Medicare Part B premiums being reimbursed to the client were used as an MA spenddown expense.
n Exclude this lump sum as income in the month received if the Medicare Part B premiums being reimbursed to the client were not used as an MA spenddown expense.
l LTCF enrollees:
n Count this lump sum as income in the month received because the gross RSDI amount is not budgeted for these clients until it is actually received.