Lump sums and long-term care

Revised July 8, 2008

Purpose: How are lump sums counted for long-term care?

Lump Sums are money received in the form of a non-recurring payment including, but not limited to: lottery, bingo, or gambling winnings, inheritance, income tax refunds, rebates, retroactive payments, and insurance settlements.

For Long Term Care, we must use the SSI related WACs to determine their effect on eligibility.

The SSI related WAC specifically excludes SSI and RSDI retroactive payments as income in the month of receipt and as a resource for 9 months following the month of receipt.

WAC 388-475-0700 SSI related medical-Income eligibility (3) and (5)

WAC 388-475-0550 SSI related medical-All other excluded resources (2)

Unspent portion of non recurring lump sum is counted as a resource on the first of the month following its receipt. (With the exception of any Title II (SSA) or Title XVI (SSI) retroactive payment indicated above)

WAC 388-475-0300 SSI related medical-Resources eligibility (4) * note this WAC reference indicates a SSI or SSA retroactive payment is excluded for 6 months. This WAC will be updated to indicate the correct 9 month per federal rule.

NOTE:

What is RSDI?

RSDI is Retirement and Survivors Disability Insurance payments under Title II of the Social Security Act.

All other lump sums must be looked at based on whether or not the department could anticipate their receipt and therefore anticipate their effect on eligibility as well as reporting requirements and advance notice requirements for recipients.; This includes retroactive VA payments.

For recipients, in most cases we will not be able to anticipate the lump sum and therefore the lump sum will not count as income.

Due to reporting requirements and the need to provide advance notice, a lump sum may not affect eligibility until the month following the change of circumstance report.

As Income (WAC 388-513-1325; 388-475-0650 ):

Anticipated nonrecurring lump sum payments are treated as income in the month received. Any remainder is considered a resource in the following month. Retroactive SSI and RSDI payments are an exception. They are always excluded as income in the month of receipt.

To be anticipated means that the client reported to us early that they were going to be receiving a lump sum or we learned about the upcoming payment from some other source. It also means that we learned about it early enough that we could affect eligibility.

For applicants, we knew about at the time we were making our eligibility decision.

For recipients, we knew about it early enough we could allow for 10 days advance notice if the lump sum would cause the benefits to be reduced or terminated. Because recipients are not required to report changes in income until the 10^th of the month following receipt, we will rarely learn of a lump sum early enough to consider it anticipated.

Income that has been anticipated in a different amount than was actually received is not an overpayment if the anticipated amount was reasonable. If the anticipated amount was based on false information or information known at the time to be incomplete, or if the department made an error in calculation, there may be an overpayment.

Unanticipated nonrecurring lump sums cannot be counted as income in the month received because SSI related and LTC medical programs must budget prospectively. We can only count income that can be anticipated. However, any amounts remaining the first of the month after the month of receipt are potentially a resource. Even though the remaining amounts become a resource, retroactive SSI and RSDI are excluded for up to 9 months following the month of receipt. .

As Resources (WAC 388-513-1350; 388-475-0300 ):

For most lump sums, the amount the person still has (unspent portion) on the first of the month following receipt is potentially a resource.

For applicants, the amount remaining would be counted for resource eligibility.
For recipients, use reporting requirements and advance notice when determine the effect of the remaining lump sum on resource eligibility.
The only exceptions are retroactive payments from SSI or RSDI.

Retroactive payments from SSI or RSDI, including benefits a client receives under the interim assistance reimbursement agreement with the Social Security Administration, are excluded as a resource for nine months following the month of receipt. Month 1 of the count is the month following receipt.

This exclusion applies to:

Payments received by the client, spouse, or any other person financially responsible for the client;
SSI payments for benefits due for the month(s) before the month of continuing payment;
RSDI payments for benefits due for a month that is two or more months before the month of continuing payment; and

Proceeds from these payments as long as they are held as cash, or in a checking or savings account. The funds may be commingled with other funds, but must remain identifiable from the other funds for this exclusion to apply. This exclusion does not apply once the payments have been converted to any other type of resource

EXAMPLE

Example #1. Unanticipated Retroactive RSDI:

Bill receives $15,000 retroactive Social Security Retirement on April 4. Social Security retirement payments are a type of Title II benefits and are considered RSDI payments.

He reports the receipt of the funds on May 10. This report is timely. The $15,000 is considered an unanticipated lump sum and cannot be counted as income in April because it is an excluded income type.

Beginning June 1, any unspent portion is excluded as a resource for 9 months, or from June 1 through February 28. We will need to set a DMS tickler to check his resources as of March 1.

EXAMPLE

Example #2 Anticipated Retroactive RSDI:

Bill receives a letter March 1 from Social Security that he has been approved for Social Security Retirement and will be sent $15,000 retroactive Social Security Retirement on April 4 so expects to receive it in April.

Although he does not need to report the payment until the 10^th of the month following the month he receives the money (5/10), he is so excited he calls his financial worker on 3/1 to tell of his Social Security approval.

Even though we know about the payment early enough to affect eligibility,

Social Security retirement payments are a type of Title II benefits and are considered RSDI payments. The $15,000 is an anticipated lump sum but it cannot be counted as income in April because it is an excluded income type.

Further, beginning May 1, any unspent portion is excluded as a resource for 9 months, or from May 1 through January 31. We will need to set a DMS tickler to check his resources as of 2/1.

Because it is an excluded resource, Bill can transfer the lump sum monies within the 9 month exclusion period without causing a transfer penalty.

If Bill is married and has a community spouse, he can transfer any resource to his spouse without penalty.

EXAMPLE

Example #3 Unanticipated Retroactive VA:

Bill is active on COPES and receives $15,000 retroactive Veterans Benefits on April 4. He reports the receipt of the funds on May 10. This report is timely. The $15,000 is considered an unanticipated lump sum and cannot be counted as income in April. Beginning June 1, any unspent portion is potentially a countable resource. The June 1st effective date is used because of the timely report (May 10), the department must give advance notice to close the case effective 5/31. There is no overpayment for May.

We must redetermine his resource eligibility effective 6/1 to see if he is within our resource standards.

If he is married and has a community spouse, he can transfer the money to his community spouse before 6/1 and it will not affect his resource eligibility nor cause a transfer penalty.

If he is not married and spends the money before 6/1, he will need to disclose how the money was spent. We will need to determine if any of it was transferred without adequate consideration causing a transfer penalty.

EXAMPLE

Example #4 Anticipated Retroactive VA:

Bill is active on COPES and receives a letter March 1 from Veterans Affairs that he has been approved for Veterans Benefits and will be sent $15,000 retroactive VA on April 4. He expects to receive it in April.

Because we know about the payment early enough to affect eligibility and retroactive VA benefits are not excluded, the $15,000 is an anticipated lump sum and is countable income for the month of April.

Further, any unspent portion is a countable resource beginning May 1.

If he is married and has a community spouse, he can transfer the money to his community spouse before 5/1 and it will not cause a transfer penalty.

EXAMPLE

Example #5 Unanticipated Inheritance:

Mary is a COPES client and her aunt died and left Mary $50,000 cash in her will. Mary learned of the inheritance on July 10 at the reading of the will and knew it would be sent to her in September. Mary received the cash on 9/15. She reported it to us timely on 10/10.

The $50,000 is an unanticipated lump sum and cannot be counted as income in September. It does not matter that Mary knew she was getting it before she received it. She was not required to report it until the 10^th of the month following the month of receipt, or 10/10. Beginning November 1, any unspent portion is potentially a countable resource.

We must redetermine her resource eligibility effective 11/1 to see if she is within our resource standards.

If she is married and has a community spouse, she can transfer the money to her community spouse before 11/1 and it will not affect her resource eligibility nor cause a transfer penalty.

If she is not married and spends the money before 11/1, she will need to disclose how the money was spent. We will need to determine if any of it was transferred without adequate consideration causing a transfer penalty.

EXAMPLE

Example #6 Anticipated Inheritance:

Mary is a COPES client and her aunt died and left Mary $50,000 cash in her will. Mary learned of the inheritance on July 10 at the reading of the will and knew it would be sent to her September 8.

Mary was concerned about how the cash would affect her COPES services and called her financial worker on 8/1 to find out. During the call she disclosed the money would be sent to her by the attorney on 9/8 so would receive it in September.

Because Mary knew when the money would be received and informed the department early enough that we could prospectively budget it for September and send advance notice, the $50,000 is an anticipated lump sum and must be counted as income in the month of September. Beginning October 1, any unspent portion is potentially a countable resource.

If she is married and has a community spouse, she can transfer the money to her community spouse before 10/1 and it will not affect her resource eligibility nor cause a transfer penalty.

If she is not married and spends the money before 10/1, she will need to disclose how the money was spent. We will need to determine if any of it was transferred without adequate consideration causing a transfer penalty.

Worker Responsibilities

When a lump sum affects resource eligibility, propose termination giving 10 day advance notice. On the termination notice indicate the following text:

Your resources are currently over the resource standard described in WAC 388-513-1350. If resources are at or below the resource standard by the first of the following month, provide verification of the value of resources as of the first. Provide this verification by the 10th. A reconsideration of the termination will be completed and if eligible your case will be reinstated. Keep in mind, transfer of asset rules described in WAC 388-513-1363 apply for long-term care services.

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