Lump Sum Cash Assistance and TANF/SFA-Related Medical Assistance

Revised September 26, 2013

Purpose:

This category contains the policies and procedures for budgeting lump sum payments for cash, TANF/SFA-Related medical, and Basic Food.

WAC 388-455-0005 How do lump sum payments affect benefits?

WAC 388-455-0010 When and how does the department treat lump sum payments as a resource for cash assistance programs?

WAC 388-455-0015 When and how does the department treat lump sum payments as income for cash assistance programs?

Clarifying Information - WAC 388-455-0005

  1. For treatment of lump sum payments placed in trust for ABD cash clients, see WAC 388-450-0005.
  2. Compensatory awards, settlements, and retroactive benefits are often issued in several smaller payments instead of one large payment. These types of payments are considered unearned income. See WAC 388-450-0025.
  3. Retroactive Lump Sums: For Basic Food, we can only count the portion of a lump sum payment that is for a previous period as a resource. We count any portion that is for the current period as income. However, with prospective budgeting we normally will not be able to budget the current month's income against the household’s benefits.
    EXAMPLE

    Bill was laid off from his job at a chicken processing plant in March. He received $3,000 in severance pay and $1,200 payout for accrued vacation leave.

    • Because the severance pay is not for a previous period, we must count it as income for March. We count any remaining amount as a resource in following months.
    • The payout of accrued vacation leave is for a previous period. We would count this portion of the payment as a resource.
    EXAMPLE

    Sharon received a $6,000 lump sum payment of Supplemental Security Income (SSI) benefits in April. Sharon’s award letter indicated that her disability was approved for a fixed period of time and she will not receive ongoing benefits. The letter shows that $5,300 is for a prior period of time, but $700 of the payment is for the current month and next month’s benefits.

    • We count the portion of the lump sum paid for prior months as a resource in April.
    • We count the $700 portion that is not for a previous period as Sharon’s income.
  4. Diversion Cash Assistance:

    For Basic Food, we consider Diversion Cash Assistance (DCA) payments to be lump sum payments.

Clarifying Information - WAC 388-455-0010

  1. We exclude a portion of the lump sum payment for 60 days in order to give the client time to use the money for its intended purpose (repair or replacement of damaged or lost property or to cover medical costs).
  2. If a client transfers the portion of the payment that counts as a resource for less than it is worth, they may have a period of ineligibility. See TRANSFER OF PROPERTY.

Worker Responsibilities - WAC 388-455-0010

  1. When a client reports that they have received a compensatory award or settlement, determine the amount that is designated to repair or replace damaged or lost property or to cover medical expenses.
  2. If any portion is designated for these specific reasons:
    1. Do not count this amount for 60 days following the month of receipt.
    2. Set an alert to request verification of the amount that remains after the 60-day period.
    3. When you receive the verification, determine if the client's total resources exceed the resource limit.
      1. If the resources are over the limit, terminate the benefits following adverse action requirements. See LETTERS
      2. If the resources are under the limit, the client remains eligible for benefits.
  3. For the portion not designated for the specific reasons:
    1. Request verification of the amount remaining after the month of receipt.
    2. When you receive the verification, determine if the client's total resources exceed the resource limit.
      1. If the resources are over the limit, terminate the benefits following adverse action requirements. See LETTERS
      2. If the resources are under the limit, the client remains eligible for benefits.

Clarifying Information - WAC 388-455-0015

  1. Clients may be required to report the receipt of a one-time payment under WAC 388-418-0005.
  2. In some situations, clients will know beforehand that they will receive a one-time payment.
    1. If this happens, we budget the payment against the benefits following the effective dates in WAC 388-418-0020.
    2. This may result in a suspense or termination. See WAC 388-450-0245.
  3. In most situations, clients will not know that they are going to receive a one-time payment until they actually have it.
    1. Often, the payment will not be budgeted against the assistance due to the rules on effective dates.
    2. You do not have to reconcile the difference to create an overpayment unless the client failed to report timely.
  4. For cash assistance, if the lump sum is received for a child, the lump sum is counted as income unless the client can put the money into an irrevocable education trust. See WAC 388-470-0045.
  5. Some reasons all or part of the lump sum may become unavailable beyond the client’s control include:
    1. The client loses the payment funds
    2. The payment funds are stolen; or
    3. The client has unavoidable expenditures such as medical bills or lawyer fees.
    4. If a client received a lump sum payment while living in another state and a period of ineligibility was established in that state, the period of ineligibility does not carry over to this state.

Worker Responsibilities - WAC 388-455-0015

When determining the value of the client’s existing resources, do not include cash assistance the client received within thirty days of receiving the lump sum.

Client Reports Before Receipt

  1. When a client reports that they will be receiving a one-time payment, determine if you need any other information before taking action. You need to know the amount and date of receipt. If the client did not provide this information at the time of report, request the information and allow 10 days for the client to provide it.
  2. When you receive the information, budget the payment against the appropriate months by allowing 10-days advance notice.
  3. If the payment causes the AU to be over income for one month, suspend the benefits for that month.
  4. If the payment causes the AU to be over income for two months, terminate the benefits and determine eligibility for other medical programs.
  5. If you do not have time to give the client 10-day notice, do not budget the payment against the benefits or create an overpayment.

Client Reports After Receipt

  1. When a client reports that they have received a one-time payment, determine if you need any other information before taking action. You need to know the amount and date of receipt. If the client did not provide this information at the time of report, request the information and allow 10 days for the client to provide it.
  2. When you receive the information, disregard the portion of the payment that is considered income in the month of receipt.
  3. If you have time to give the client 10 days notice, budget the appropriate amount against the following month.
  4. If the payment causes the AU to be over income for that month, suspend the benefits.
  5. If you do not have time to give the client 10-day notice, do not budget the payment against the benefits or create an overpayment.

Client Reports Untimely

  1. When a client reports the receipt of a lump sum payment later than required under WAC 388-418-0007, determine the effective date as if they had reported timely. See WAC 388-418-0020.
  2. Create overpayments as appropriate. See BENEFIT ERRORS.

ACES PROCEDURES

See Interview - (RES1), (RES2) and (RES3) screens.

 

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