If the individual decides to count the lump sum payment as income, the CAO will count the money in the month that the person received it.
If any money is left after that month, the CAO will count it as a resource.
The CAO must decide whether the lump sum income is earned or unearned.
A lump sum payment is considered earned if it is a one-time-only or delayed payment from employment wages, tips, salaries, commissions, or bonuses.
Example: Any extra pay the individual receives must be considered a lump sum payment unless he gets the money regularly or frequently
.
Self-employment income must not be considered a lump sum payment.
When an individual receives a lump sum payment of earned income, the CAO will verify the date, source, and amount of the payment and add it to the individual’s other earned income for the month.
For the MA LTC eligibility determination (Step 1):
For individuals in Nonmoney Payment (NMP) programs, the CAO will add the total gross earned income to the individual’s total countable unearned income for the calendar month and compare the amount to the special gross income limit (see Chapter 468, Appendix A).
For individuals in Medically Needy Only (MNO) programs, the CAO will use the same income exclusion, deduction, and computation procedures that apply to an individual on MA (see the MA Eligibility Handbook, Chapter 361).
If the individual’s total net income including the lump sum is below the income limit, he is income eligible for MA LTC. If the individual is living in a LTC facility, the CAO will determine the individual's payment toward the cost of care (Step 2). To determine the individual's payment toward the cost of care, the CAO will allow only those deductions listed in Chapter 468.3.
When an individual receives a lump sum payment of unearned income, the CAO must verify the date, source, and amount of the payment and add it to the individual’s other unearned income for the month.
NOTE: The CAO will not count a lump sum payment that is excluded as either income or a resource.
The CAO will deduct the following in Step 1:
Expenses that the individual must pay to get the lump sum, such as attorney fees and court costs.
The proceeds of a life insurance policy up to $1,500 that was used for burial expenses and any expenses of the insured's last illness that can be proven.
The CAO will then count the total net income, including the lump sum, as income available in the month it was received.
For individuals in Nonmoney Payment (NMP) programs, the CAO will compare the total net income to the special gross income limit (see Chapter 468, Appendix A).
For individuals in Medically Needy Only (MNO) programs, the CAO must compare the total net income to the MNO limit (see Chapter 468, Appendix A).
If the total net income is more than the six-month income limit, the individual is not eligible for MA LTC benefits.
If the total net income including the lump sum payment is within the limit, the individual is income eligible for MA LTC.
If the individual is living in a LTC facility, the CAO will determine the individual's payment toward cost of care (Step 2). To determine the individual’s payment toward the cost of care, the CAO will allow only those deductions listed in Chapter 468.3.
NOTE: The individual must fill out an application for benefits (PA 600L) if a renewal of eligibility is due for that calendar month.
Example: Mrs. L., an NMP MA LTC recipient, receives an inheritance of $100,000 on September 2 and reports it to the CAO on September 5. She chooses to treat the lump sum inheritance as income.
The CAO finds that her income is over the limit for the month and issues a 15-day advance notice to change Mrs. L.'s payment toward the cost of care for September.
In October, the money left from the inheritance is counted as a resource.
If Mrs. L.’s total resources exceed the limit, the CAO sends a 15-day advance notice to Mrs. L. telling her that it is stopping her benefits.
Reminder: Interest that is earned on an account is treated as recurring income. Interest that is kept in the account is also counted as a resource in the next month.
Updated March 12, 2012, Replacing June 2, 2008