For MAGI individuals, lump sums must be counted as income in the calendar month it is received.
For all other MA categories, if it will help the applicant/recipient group to treat the lump sum as income, the CAO will count the payment in the calendar month that it is received. The CAO will allow certain deductions from the lump sum income that are not allowed when the payment is counted as a resource.
Example: For TANF-related categories, burial expenses can be deducted from an insurance benefit, and proven medical expenses can be deducted from a personal injury award. For SSI-related MA, attorney fees incurred in obtaining unearned income can be deducted.
NOTE: The treatment of a lump sum payment as income usually happens during a retroactive period or when a lump sum is exempt as income.
After the month that a lump sum is counted as income, any amount that is left over will be counted as a resource.
The CAO will allow certain deductions from a lump sum when it is counted as income. The deductions depend on whether the lump sum is earned or unearned and the category of MA that the applicant/recipient group receives. 55 Pa. Code § 181.31(c) For MAGI MA, verified tax deductions may be used.
If the lump sum is received by a legally responsible relative (LRR) who lives in the household, the CAO will determine how much of the lump sum is deemed available to the applicant/recipient group. (See Chapter 355, Deeming Income and Resources.) The amount deemed available will be counted as unearned income.
For MAGI MA, the lump sum is available and counted for the household if the individual is included in household composition.
If a lump sum is earned, the CAO will count the lump sum in the month the individual received it. The CAO must follow these guidelines:
Confirm the date, amount, and source of the payment. If the lump sum is received by an LRR living in the household, determine how much of the lump sum is deemed available to the applicant/recipient group. (See Chapter 355, Deeming Income and Resources.)
For MAGI MA, count the lump sum for the tax household, or household if non-filer rules are used.
Do not count a lump sum payment that is excluded as either income or a resource.
Add the lump sum to other earned income received by the applicant/recipient group in the calendar month.
Subtract all of the earned income deductions allowed for the category of MA. (See Chapter 360, NMP Deductions, and Chapter 361, MNO Deductions.)
NOTE: Verified tax deductions are allowed for MAGI MA. For MAGI MA, if the five percent income disregard is needed it should be applied to the total household income.
Reminder: The TANF-related category for both NMP and MNO includes the PD and TD parent or stepparent of a child receiving TANF, MA, or SSI.
Count the total net income, including the lump sum, as income available in the calendar month.
For NMP and MAGI MA, if the total net income is more than the monthly income limit, the applicant/recipient group or individual is not eligible in the calendar month in which they received the lump sum.
NOTE: If the CAO cannot meet the deadline to close MA in the month when the lump sum is received, MA will continue. An overpayment does not occur if the individual reports the lump sum in time.
For Healthy Horizons, if the total net income is more than the monthly income limit, determine the income for the calendar year. Include the lump sum. If the total net income for the calendar year is more than the annual limit, the applicant/recipient group is not eligible.
NOTE: If the Healthy Horizons individual applies again in a month after he or she received the lump sum payment and the month is in a different calendar year from when the payment was counted as income, then the CAO will count the amount of the lump sum that is left over as a resource when determining eligibility for the current calendar month or calendar year. The CAO will include any interest that has built up from the lump sum payment.
Example: An individual receives a lump sum payment of $12,000 on September 1, and applies for Healthy Horizons on September 15. The application is denied, because the applicant's total net income for September and the calendar year is over the Healthy Horizons income limit. The individual applies again on February 4 in the next year and has $6,500 left of the lump sum in a savings account. The account paid $97.50 in interest on January 16, in the previous month and will pay interest quarterly. The caseworker will count $6,500 (the amount that is left over from the original lump sum) as a resource in February and will count the interest in the eligibility determination.
For MNO, if the total net income is more than the six-month income limit, the applicant/recipient group is not eligible. If the lump sum is received in a retroactive month, eligibility is affected for the calendar month when it is received.
NOTE: If an individual applies again at any time after the month when the lump sum is received, the CAO will determine eligibility using a new six-month period.
If the total net income, including the lump sum, is not over the income limit, the applicant/recipient group is eligible.
After the first month when a lump sum is received, any amount left over will be counted as a resource.
If the CAO determines, at any point before they take action, that it would benefit the applicant/recipient group, they will count the lump sum as a resource.
Example: Mr. Gomez applies for MA on June 6 to pay a hospital bill from April. In April, his total resources were $150 less than the one-person TD limit. In April, his only income was a final paycheck of $67 from his job and a late lump sum payment of $430 for wages he earned in January. Mr. Gomez chooses to have the lump sum counted as income for April after the CAO explains that it would put him over the resource limit. The CAO counts the lump sum as follows:
|
Other earned income |
$67 |
|
Earned lump sum |
+430 |
|
Total earnings |
$497 |
|
Work expenses |
-107 |
|
|
$390 |
|
Personal expenses (transportation) |
-32 |
|
Total net earned income |
$358 |
|
|
x6 |
|
Six month Income |
$2,148 |
Mr. Gomez is eligible for MNO for the month of April because his total income, including the lump sum, is less than the one-person monthly limit, and continues to be eligible for MNO since his semi-annual income is within limits. The CAO approves MNO for April 1 through April 30.
If the lump sum is unearned, the CAO will count the lump sum, following these guidelines:
Confirm the date, amount, and source of the payment. If the lump sum is received by an LRR living in the household, determine how much of the lump sum is deemed available to the applicant/recipient group. (See Chapter 355, Deeming Income and Resources.)
For MAGI MA, count the lump sum for the tax household, or household if non-filer rules are used.
Do not count a lump sum that is excluded as either income or a resource.
Add the lump sum to other unearned income received in the calendar month.
Deduct expenses that the individual must pay to be eligible for or to receive the lump sum, such as attorney fees and court costs.
For MAGI MA, deduct verified tax deductions. The 5% income disregard must be deducted when applicable.
For TANF/GA-related categories, deduct expenses directly related to the type of income. For example, deduct burial expenses from an insurance settlement, and deduct medical expenses from a personal damage award.
For SSI-related categories, deduct up to $1,500 of the money from a life insurance policy that was used for burial expenses and the expenses of the insured's last illness. Only deduct expenses that are verified.
For TANF/GA-related categories, deduct any replacement costs of real or personal property from a personal damage award or insurance settlement using:
The proven cost of repair of the property.
The replacement cost of the property.
Deduct the largest of the following costs:
The value set by the payer or insurance company.
The value set at the last renewal before the damage occurred, minus the value after the damage.
The value that would have been assigned in a way that is acceptable to DHS, such as Kelly blue book value of a motor vehicle.
The proven value of the property when the loss took place.
For SSI-related categories, deduct the first $20 of unearned income.
Exception: Do not allow the $20 if the lump sum is from a need-based program funded totally or in part by the federal government or by a nongovernmental agency.
Count the total net income, including the lump sum, as income available in the calendar month.
For NMP, if the total net income is more than the income limit, the applicant/recipient group is not eligible in the calendar month in which they received the lump sum.
NOTE: If the CAO cannot meet the deadline to close MA in the month when the lump sum is received, MA will continue. An overpayment does not occur if the individual reports the lump sum in time.
For Healthy Horizons, if the total net income is more than the monthly income limit, determine the income for the calendar year. Include the lump sum. If the total net calendar year income is more than the annual limit, the applicant/recipient group is not eligible.
NOTE: If the Healthy Horizons individual applies again in a month after he or she received the lump sum payment and the month is in a different calendar year from when the payment was counted as income, then the CAO will not count the lump sum or any part of it that is left over as either income or a resource when determining eligibility for the current calendar month or calendar year. The CAO will include any interest that has built up from the lump sum payment.
Example: An individual receives a lump sum payment of $12,000 on September 1, and applies for Healthy Horizons on September 15. The application is denied, because the applicant’s total net income for September and the calendar year is over the Healthy Horizons income limit. The individual applies again on February 4 in the next year and has $6,500 left of the lump sum in a savings account. The account paid $97.50 in interest in the previous month on January 16, and will pay interest quarterly. The caseworker will count $6,500 (the amount that is left over from the original lump sum) as a resource in February and will count the interest in the eligibility determination.
For MNO, if the total net income is more than the six-month income limit, the applicant/recipient group is not eligible. If the lump sum is received in a retroactive month, eligibility is affected for the calendar month it is received.
NOTE: If an individual applies again at any time after the month when the lump sum is received, the CAO will determine eligibility using a new six-month period.
If the total net income, including the lump sum, is not over the income limit, the applicant/recipient group is eligible.
After the first month a lump sum is received, any amount left over will be counted as a resource.
Example: Ms. Phillips, a single adult, age 30, is eligible for MNO for a six-month period beginning in April. In June, she receives a lump sum payment of $6,000. She has no plans to spend the money. The CAO counts the lump sum as unearned income for June. Because total income for the six-month period of April through September is over the limit, the CAO stops MA. On July 25, Ms. Phillips applies for MA again. She still has $5,200 of the lump sum in a separate bank account. The CAO determines her eligibility for a new six-month period beginning in July. The amount of the lump sum that is left over is counted as a resource. The CAO denies Ms. Phillips for MNO because she is over the limit for resources.
For non-MAGI MA, if the CAO determines, at any point before they take action, that it would help the applicant/recipient group, they will count the lump sum as a resource.
Examples:
1. Mr. Kelly, age 35, applies for MNO (TD). He has net earned income of $300 a month from a part-time job. He has $2,400 in total countable resources. In the calendar month of application, he also received an unearned lump sum payment of $500. Mr. Kelly chooses to have the lump sum treated as income because it would put his resources over the one-person resource limit. The CAO counts the lump sum as follows:
|
Mr. Kelly is eligible for MNO for six calendar months beginning with the month of application, because his total income is less than the one-person MNO income limit.
2. On July 7, Mr. Lee, age 42, applies for retroactive MNO to cover a hospital bill for June 3 to June 10. He presents an unpaid hospital bill of $3,000. He had no income in June, but he received a lump sum payment of $500 in June. His total countable resources were $2,200 for June.
If the CAO counts the lump sum as a resource, Mr. Lee's total resources will be $300 more than the resource limit of $2,400, and he will not be eligible. If he uses the amount that is over the limit ($300) to pay a part of the hospital bill, the CAO will approve MNO to cover the rest of the medical expenses for June. He has unearned income of $300 a month, beginning in July. The CAO approves retroactive MNO for June, and ongoing MNO for the period July – November.
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For MAGI MA, a lump sum is always counted as income, but only in the month it is received.
Examples:
1. Ms. Jackson, age 32, a single adult without dependents, receives a lump sum in June. In July, she applies for MA. The CAO will not count the lump sum because it was received in the month prior to the month of application.
2. Mr. Michaels, a 53 year old tax filer who files jointly with his wife and claims as tax dependents his two children, ages 15 and 9, applies for MAGI MA in March for his family. In the same month, he receives a lump sum payment of $42,000. The $42,000 will count for the month of March for the tax household and will be added to the rest of the household income, $1,500 per month in wages from Mrs. Michael’s job. Mr. Michael’s, his wife and children will not be eligible for MA during the month of March. MA eligibility would begin April 1.
Updated September 5, 2018; Replacing February 14, 2012