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Effective: October 1, 2007 |
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20.25.10ar2 - Lump Sum Income (Archive) |
Archived: March 1, 2009 |
Lump sums are income received on a non-recurring or irregular basis that cannot be reasonably anticipated.
Examples of lump sums include:
l Winnings.
l Insurance settlements.
l Inheritances.
l Retroactive payments of RSDI, VA, and Unemployment Insurance. See RSDI and SSI for more information on these specific types of income. For further information on excluded income, see Excluded Income.
l Gifts that are not excluded income under specific program provisions.
SSI, RSDI, and VA Payment Due to Representative Payee Misuse of Benefit.
Medicare Part B Reimbursements.
Exclude lump sum income for MCRE.
l For information on how to treat a lump sum of RSDI or SSI payments for MCRE, refer to the section RSDI and SSI Lump Sum Income.
l Some lump sums, such as winnings over a given amount, may be taxable. If a client’s tax form includes a lump sum, subtract the lump sum from the adjusted gross income unless the household anticipates receiving income from the same source in the next year.
Example:
Household is approved for Social Security Survivors' benefits because of the death of the father. They receive a lump sum of $5,000 for previous months and ongoing benefits of $1,000 per month.
Action:
Exclude the $5,000 retroactive payment as income.
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.
For instructions on how to treat lump sum income for RSDI and SSI, see the subtopic in this section.
Treat other lump sums as unearned income in the month received and an asset if retained beyond the month of receipt.
l Do not change eligibility or spenddown amounts for previous or current months, based on the receipt of an unanticipated lump sum.
Exception: See MA Payment of Long-Term Care (LTC) Services for clients using an LTC budget.
l Do not change eligibility for future months for which you cannot give 10-day notice, based on the receipt of an unanticipated lump sum.
Example:
Maria, Lawrence and their two children are eligible for MA without a spenddown as of March 1. On May 5, Maria reports the family received a $50,000 insurance settlement on April 25. She indicates they already spent $20,000 to pay off their home.
Action:
Update the income calculation for April with the lump sum, after deductions. This income creates a spenddown for the family. If the family cannot meet the spenddown, their eligibility will be closed giving 10-day notice.
Reminder: Eligibility for March, April and May cannot be changed. Also, the family retained $30,000 of the lump sum into May. If this amount puts the asset total over Maria and Lawrence’s asset limit, the worker would also be closing the two for excess assets.
l Do anticipate and budget an expected lump sum when determining initial and continuing eligibility based on income calculation rules.
Example:
Elmer receives RSDI monthly. He also receives a rental payment every June and December. His budget period is January - June.
Action:
Count the RSDI and the rental payment, because it can be anticipated, in the income calculation for the budget period.
l Lump sums may affect eligibility for people who have an asset limit, in the month following receipt, if the lump sum is retained and creates excess assets.
l Lump sums may result in a spenddown or a change in spenddown or eligibility. See the subtopic Income Changes in this chapter for more details on how a lump sum affects eligibility.
To determine countable lump sum income, allow the following deductions from the lump sum before including it in the income calculation:
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.
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 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.
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 $500 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.
m Count 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.
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.
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 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 refers to Method B only.
When an individual Representative Payee of 15 or more beneficiaries or an organization Representative Payee has been found to misuse a client’s benefits the client's SSI, RSDI, or Special Veterans Benefits for the Elderly may be reissued by SSA.
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 and an asset in the month.
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 Reimbursements
This policy refers to Method B only.
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.
Note: This is because the gross RSDI amount is not budgeted for these clients until it is actually received.