After allowing lump sum deductions according to Section 157.3 and Section 157.4, the CAO must determine the effect on the budget group’s eligibility depending on the amount of the lump sum and the relationship of the person who received the lump sum.
If the CAO has begun a closure for another reason and the budget group timely reports that it has received a lump sum, an overpayment may occur in the month after the month when it is received if the budget group has excess resources. If the budget group reapplies, count any remaining lump sum as a resource.
Example:
Ms. Tanner and her children receive TANF. On March 22, she reports the start of a job. The CAO determines that her expected earnings will close cash benefits effective the second payment date in April. On March 29, Ms. Tanner reports that she received an inheritance cash settlement of $2,500. On April 1, the CAO processes an overpayment referral for April due to excess resources because Mrs. Tanner did not verify that her resources are below the $1,000 allowable limit.
When rejecting an application for lottery resources, narrate the amount of winnings and the month of receipt. If the individual reapplies during the 12-month period when resources are considered available, the CAO will need to ensure that the amount is counted correctly when determining eligibility.
For an applicant:
Count a lump sum payment in determining eligibility and payment amount for the application month if it is received before authorization of cash assistance.
The CAO will count lump sum lottery winnings received for an applicant, in the same month of application, as unearned income, regardless of the amount claimed. See Chapter 150 Income.
If counting the lump sum payment results in ineligibility, consider funds remaining in later months as a resource.
Example: Mrs. Martin applies for Cash Assistance for herself and three children on June 14. She reports that she received a net settlement of $10,000 on June 3, to compensate her for her injuries from a fall at a restaurant last year. Mrs. Martin reports that she has $2,500 left after buying a used car. She is financially ineligible for assistance in June. The CAO explains that beginning July 1, she may be eligible for Cash Assistance as long as her resources, including any money left from the lump sum, are within the allowable limit of $1,000 or less.
For a recipient:
If the lump sum payment is reported timely, by the 10th of the month after the receipt month, there is no overpayment.
Net lump sum income (after allowable deductions in Section 157.3) that is not expected to continue as a source of regular income is considered income that starts and stops and is not counted.
If the source of the lump sum payment provides a continuing countable cash payment (such as a Social Security benefit) that is:
greater than the FSA for the budget group, send an advance notice to close the cash benefit with the first payment date that can be met.
greater than the FSA for the budget group when combined with other countable income in the budget group, send an advance notice to close the cash benefit with the first payment date that can be met.
less than the FSA when combined with other countable income in the budget group, send an advance notice to decrease the cash benefit with the first payment date that can be met.
Example:
Mrs. Harrison receives TANF for herself and her two children. On May 12, she reports that on April 25 she received back pay of $5,000 from a former employer. The CAO sends notification to Mrs. Harrison to close her Cash Assistance case due to excess resources. Because Mrs. Harrison did not report timely, an overpayment referral is completed for April due to excess income and for May due to excess resources.
For a lump sum payment received by a budget group member or an LRR living in the home, except for a parent of a TANF minor parent:
Funds remaining from the lump sum payment count as a resource.
If the lump sum is lottery winnings of $600 or more, count the lump sum as an available resource for 12 months by dividing the lump sum amount into a 12-month period. The monthly value will be counted for a 12-month period from date of receipt, even if the applicant/recipient spent all the winnings.
If the net lump sum payment combined with any other countable resources is less than the resource limit for the budget group, Cash Assistance remains open.
If the net lump sum payment combined with any other countable resources is greater than the budget group’s resource limit but the household verifies expenditures leaving a remaining lump sum that is less than the appropriate resource limit, the CAO need take no further action. Cash Assistance remains open.
If the net lump sum payment combined with any other countable resources is greater than the resource limit for the budget group and the household does not give proof that available resources are within allowable limits, the CAO will send an advance notice to close based on excess resources. An overpayment exists for any months the household received a cash benefit and was ineligible based on excess resources.
NOTE: The CAOs are encouraged to discuss ways the individual may use the lump sum payment to help become self-sufficient. The discussion could include using the funds to buy a reliable vehicle or to start a family savings account See Chapter 140.8, to save for an education See Chapter 140.9, for a home or to start a business. Deposits and interest on family savings accounts are exempt from consideration for cash programs.
Examples:
For a lump sum payment received by a stepparent or a parent of a TANF minor parent, exclude as a resource any portion kept by the stepparent or parent of a TANF minor parent after the month when it is received when determining the budget group’s eligibility unless it is made available to the budget group.
For a lump sum payment received by a sponsor of a noncitizen , any part kept by the sponsor after the month when it is received is a resource to the noncitizen in later months.
If the exact amount of the lump sum is unknown and the client refuses to provide information, the CAO must send an advance notice of Cash Assistance closing for failure to provide information. If necessary, the CAO must complete an OIG 173, Reimbursement Referral. See Supplemental Handbook 915.7.
When the budget group does not report the receipt of a lump sum timely, the CAO must determine if an overpayment exists, beginning with the month when the lump sum is received.
The CAO must not allow work or personal expense deductions or the earned income incentive from earned income unless good cause is established.
NOTE: Good cause includes, but is not limited to, serious illness, accident, death, physical or mental handicap, illiteracy or language problems that make it impossible to expect the person to meet reporting requirements.
Example: A client received but did not report a lump sum payment of $3,500 in September. The CAO discovers the lump sum payment in December. The CAO contacts the client and determines that the budget group had other net income from RSDI of $300 and TANF of $102 for three people in September. The net lump sum is $3,000 after allowing a $500 attorney fee as an expense deduction.
Countable lump sum |
$3,000 |
Other net unearned income |
+ 300 |
Total net income for September |
$3,300 |
The CAO completes an overpayment referral for September based on excess income and for October through December based on excess resources.
The overpayment due to excess resources would exist only for the months the resources were not verified to be below the resource limit. There is no overpayment for any month after the receipt month for which the client verifies that resources were below the resource limit.
Revised June 18, 2024, replacing December 24, 2018