Lump Sum Income

(A) Definition. (1) Income is considered to be lump sum when it is received as a one-time, nonrecurring payment. Exclusions from the lump sum income calculation are provided in 106 CMR 704.240(B). (2) Lump sum income may be either earned or unearned income. It does not include contractual salaries. (3) Lump sum income includes, but is not limited to, the following types of income: (a) Accumulation of retroactive income such as Railroad Retirement, Federal Veterans' Benefits, Workers' Compensation that represents loss of income, retroactive Social Security payments, Unemployment Compensation, child support, retroactive wages, and compensation for lost wages received under the Compensation to Victims of Violent Crimes Act; and (b) Other payments in the nature of a windfall, such as lottery winnings, inheritances, settlements and awards that are not totally or partially received as a reimbursement for a specified items and used to pay for them. Whatever portion of the lump sum income that is received as a reimbursement for specified items and used to pay for them is considered noncountable. (4) Verification of lump sum income is by an appropriate document, such as: (a) a copy of the benefit or award letter; (b) a copy of the check or payment document; (c) a written statement from the agency or person making the payment; and (d) if applicable, a written statement from the agency, person making the payment, or attorney representing the client, that states what specific items are being reimbursed as part of the lump sum payment and receipts that verify the payment for the specific items. (B) Exclusions from Lump Sum Income. The following types of lump sum income are excluded: (1) Lump sum income received by a stepparent who is not a member of the assistance unit; (2) Lump sum income that is noncountable as provided in 106 CMR 704.250; Any portion of a Workers' Compensation, property damage, personal injury, Compensation to Victims of Violent Crimes Act, or death settlement or award, except for compensation for lost wages, that is received as a reimbursement for specified items and used to pay for such items is excluded as income in accordance with 106 CMR 704.250. This is verified by a written statement from the agency, person making the payment, or attorney representing the client, that states what specific items are being reimbursed as part of the lump sum payment and receipts from the assistance unit that verify the payment for the specific items; Any portion of the lump sum income verified as being used to pay for back bills, day-to-day living expenses and obligations incurred while waiting for the lump sum income. For purposes of 106 CMR 704.240(B)(4), day-to-day living expenses and obligations of the assistance unit shall be limited to the cost for: (a) health insurance premiums, or health care treatment or services essential for the treatment of members of the assistance unit to the extent that such costs were not covered by any health insurance or MassHealth. Expenses incurred as the result of cosmetic surgery unrelated to illness, accident or surgery are not allowable. Expenditures which would not constitute essential health care treatment include those for vacations, recreational equipment such as swimming pools or athletic equipment, extravagant items, and leisure activities. These costs must be verified by copies of paid medical bills, health insurance premium payments, or both; (b) actual transportation costs or $150 per month, whichever is less, not covered by any other source. These costs must be verified by copies of paid bills or receipts for transportation expenses; (c) replacement or repair of existing household furniture or the purchase of household furniture when the family did not previously own such items, or the replacement or repair of an existing defective refrigerator, home heater, stove, oven, washer, and/or dryer, or the purchase of said appliances where the family did not previously own such items, for the total actual costs or $2500, whichever is less. These costs must be verified by copies of paid bills or receipts; (d) basic repairs of a home owned and lived in by the assistance unit, exclusive of remodeling, for the total actual costs or $2500, whichever is less. These costs must be verified by a copy of the deed to the property and copies of paid bills or receipts; (e) payments for court-ordered judgments including alimony and/or child support. These costs must be verified by copies of the court orders and copies of the canceled checks or receipts showing the amount and date of payment and to whom paid; and (f) payments for obligations to local, state and federal governments. These costs must be verified by a copy of a canceled check or receipt showing the amount and date of payment and to whom paid; up to $150,000 of lump sum income from a personal injury settlement that is immediately placed into an irrevocable trust and is for the benefit of an injured person who is legally incompetent. (a) Distributions from the trust are not counted if the terms of the trust restrict distributions to those needed to meet the injured person's special needs which result from the injury. Special needs include, but are not limited to, medical care such as rehabilitative therapies, pain management and personal care attendants, education-related expenses, vocational training or rehabilitation, transportation-related needs, such as the purchase and/or retrofitting of a van, and special equipment, clothing or services for the disabled. All other distributions are countable. Distributions made to the trustee for the reasonable costs of administering the trust will not be counted. (d) if applicable, a written statement from the agency, person making the payment, or attorney representing the client, that states what specific items are being reimbursed as part of the lump sum payment and receipts that verify the payment for the specific items. (B) Exclusions from Lump Sum Income. The following types of lump sum income are excluded: ( 1) Lump sum income received by a stepparent who is not a member of the assistance unit; (2) Lump sum income that is noncountable as provided in 106 CMR 704.250; Any portion of a Workers' Compensation, property damage, personal injury, Compensation to Victims of Violent Crimes Act, or death settlement or award, except for compensation for lost wages, that is received as a reimbursement for specified items and used to pay for such items is excluded as income in accordance with 106 CMR 704.250. This is verified by a written statement from the agency, person making the payment, or attorney representing the client, that states what specific items are being reimbursed as part of the lump sum payment and receipts from the assistance unit that verify the payment for the specific items; (4) Any portion of the lump sum income verified as being used to pay for back bills, day-to-day living expenses and obligations incurred while waiting for the lump sum income. For purposes of 106 CMR 704.240(B)(4), day-to-day living expenses and obligations of the assistance unit shall be limited to the cost for: (a) health insurance premiums, or health care treatment or services essential for the treatment of members of the assistance unit to the extent that such costs were not covered by any health insurance or MassHealth. Expenses incurred as the result of cosmetic surgery unrelated to illness, accident or surgery are not allowable. Expenditures which would not constitute essential health care treatment include those for vacations, recreational equipment such as swimming pools or athletic equipment, extravagant items, and leisure activities. These costs must be verified by copies of paid medical bills, health insurance premium payments, or both; (b) actual transportation costs or $150 per month, whichever is less, not covered by any other source. These costs must be verified by copies of paid bills or receipts for transportation expenses; (c) replacement or repair of existing household furniture or the purchase of household furniture when the family did not previously own such items, or the replacement or repair of an existing defective refrigerator, home heater, stove, oven, washer, and/or dryer, or the purchase of said appliances where the family did not previously own such items, for the total actual costs or $2500, whichever is less. These costs must be verified by copies of paid bills or receipts; ( d) basic repairs of a home owned and lived in by the assistance unit, exclusive of remodeling, for the total actual costs or $2500, whichever is less. These costs must be verified by a copy of the deed to the property and copies of paid bills or receipts; (e) payments for court-ordered judgments including alimony and/or child support. These costs must be verified by copies of the court orders and copies of the canceled checks or receipts showing the amount and date of payment and to whom paid; and (f) payments for obligations to local, state and federal governments. These costs must be verified by a copy of a canceled check or receipt showing the amount and date of payment and to whom paid; up to $150,000 of lump sum income from a personal injury settlement that is immediately placed into an irrevocable trust and is for the benefit of an injured person who is legally incompetent. (a) Distributions from the trust are not counted if the terms of the trust restrict distributions to those needed to meet the injured person's special needs which result from the injury. Special needs include, but are not limited to, medical care such as rehabilitative therapies, pain management and personal care attendants, education-related expenses, vocational training or rehabilitation, transportation-related needs, such as the purchase and/or retrofitting of a van, and special equipment, clothing or services for the disabled. All other distributions are countable. Distributions made to the trustee for the reasonable costs of administering the trust will not be counted. Distributions which would not be considered for a person's special needs include vacations, recreational equipment such as swimming pools, extravagant items, and leisure activities. Verification of an injured person's legal incompetence shall be by: (b) a document as provided in 106 CMR 703.220(B): Verification verifying that the injured person is younger than 18 years old, if applicable; and (c) a document from the court that appoints a guardian or conservator for the injured person or otherwise declares that the injured person is incompetent. Verification of the amount and terms of the trust shall be by a copy of the trust document. Verification that distributions were used to meet special needs shall be by copies of paid bills or receipts showing the amount and date of payment, and to whom paid, and medical documentation, if appropriate. The first $600 of lump sum income is noncountable income in the month of receipt. Any portion that exceeds the $600 amount is countable in the month of receipt. (C) Availability for Needs. Lump sum income, that is not excluded as provided in 106 CMR 704.240(B), received by a member of the filing unit is considered available income to meet the needs of all members of the assistance unit at the time of its receipt resulting in a specified period of ineligibility in accordance with 106 CMR 704.240(D). (D) Calculation of Period of Ineligibility. (1) To calculate whether the assistance unit is ineligible due to lump sum income: (a) Add the filing unit's earned lump sum income to any other earned income received by the filing unit or deemed to the filing unit and deduct applicable disregards in accordance with 106 CMR 704.270, 704.275, 704.280 and 704.281. Add the result of this calculation to the filing unit's unearned lump sum income and any other countable unearned income received by the filing unit or deemed to the filing unit; (b) If the total of 106 CMR 704.240(D)(l)(a) is less than or equal to the appropriate Need Standard for the TAFDC assistance unit or standard of assistance for the EAEDC assistance unit, the assistance unit remains eligible and the income is deducted from the Need Standard for TAFDC or the standard of assistance for EAEDC; or (c) If the total of 106 CMR 704.240(D)(l)(a) is greater than the appropriate Need Standard for the TAFDC assistance unit or standard of assistance for the EAEDC assistance unit, the assistance unit is ineligible. (2) Any period of ineligibility is determined as follows: (a) Divide the total income in 106 CMR 704.240(D)(l)(a) by the appropriate Need Standard for the TAFDC assistance unit or standard of assistance for the EAEDC assistance unit. The result will be the number of months in the period of ineligibility; (b) Any remainder in 106 CMR 704.240(D)(2)(a) is considered unearned income in the first month following the period of ineligibility and is deducted from the appropriate Need Standard for the TAFDC assistance unit or standard of assistance for the EAEDC assistance unit, provided there is a reapplication for assistance during that month; and (c) The period of ineligibility begins on the first day of the cyclical month of receipt of the lump sum income. Any assistance received during the ineligibility period is considered an overpayment in accordance with 106 CMR 706.200: Overpayments and Underpayments. (E) Change in Circumstances. Once a determination of the period of ineligibility is made, it remains in effect for all members of the filing unit except in situations resulting in recalculation as provided in 106 CMR 704.240(F). Changes in income for members of the filing unit shall not alter the period of ineligibility for any of the members of the ineligible assistance unit. A new member to the assistance unit during the period of ineligibility, if otherwise eligible, shall receive a grant amount equal to the appropriate Need Standard for TAFDC or standard of assistance for EAEDC, less any countable deductible income during the remainder of the period of ineligibility. Distributions which would not be considered for a person's special needs include vacations, recreational equipment such as swimming pools, extravagant items, and leisure activities. Verification of an injured person's legal incompetence shall be by: (b) a document as provided in 106 CMR 703.220(B): Verification verifying that the injured person is younger than 18 years old, if applicable; and (c) a document from the court that appoints a guardian or conservator for the injured person or otherwise declares that the injured person is incompetent. Verification of the amount and terms of the trust shall be by a copy of the trust document. Verification that distributions were used to meet special needs shall be by copies of paid bills or receipts showing the amount and date of payment, and to whom paid, and medical documentation, if appropriate. (7) The first $600 of lump sum income is noncountable income in the month of receipt. Any portion that exceeds the $600 amount is countable in the month of receipt. (C) Availability for Needs. Lump sum income, that is not excluded as provided in 106 CMR 704.240(B), received by a member of the filing unit is considered available income to meet the needs of all members of the assistance unit at the time of its receipt resulting in a specified period of ineligibility in accordance with 106 CMR 704.240(D). (D) Calculation of Period of Ineligibility. (1) To calculate whether the assistance unit is ineligible due to lump sum income: (a) Add the filing unit's earned lump sum income to any other earned income received by the filing unit or deemed to the filing unit and deduct applicable disregards in accordance with 106 CMR 704.270, 704.275, 704.280 and 704.281 . Add the result of this calculation to the filing unit's unearned lump sum income and any other countable unearned income received by the filing unit or deemed to the filing unit; (b) If the total of 106 CMR 704.240(D)(l)(a) is less than or equal to the appropriate Need Standard for the TAFDC assistance unit or standard of assistance for the EAEDC assistance unit, the assistance unit remains eligible and the income is deducted from the Need Standard for TAFDC or the standard of assistance for EAEDC; or (c) If the total of 106 CMR 704.240(D)(l)(a) is greater than the appropriate Need Standard for the TAFDC assistance unit or standard of assistance for the EAEDC assistance unit, the assistance unit is ineligible. (2) Any period of ineligibility is determined as follows: (a) Divide the total income in 106 CMR 704.240(D)(l)(a) by the appropriate Need Standard for the TAFDC assistance unit or standard of assistance for the EAEDC assistance unit. The result will be the number of months in the period of ineligibility; (b) Any remainder in 106 CMR 704.240(D)(2)(a) is considered unearned income in the first month following the period of ineligibility and is deducted from the appropriate Need Standard for the TAFDC assistance unit or standard of assistance for the EAEDC assistance unit, provided there is a reapplication for assistance during that month; and (c) The period of ineligibility begins on the first day of the cyclical month of receipt of the lump sum income. Any assistance received during the ineligibility period is considered an overpayment in accordance with 106 CMR 706.200: Overpayments and Underpayments. (E) Change in Circumstances. Once a determination of the period of ineligibility is made, it remains in effect for all members of the filing unit except in situations resulting in recalculation as provided in 106 CMR 704.240(F). Changes in income for members of the filing unit shall not alter the period of ineligibility for any of the members of the ineligible assistance unit. A new member to the assistance unit during the period of ineligibility, if otherwise eligible, shall receive a grant amount equal to the appropriate Need Standard for TAFDC or standard of assistance for EAEDC, less any countable deductible income during the remainder of the period of ineligibility. (F) Situations Resulting in Recalculation. The period of ineligibility cannot be altered or recalculated for any member of the ineligible assistance unit, except in the situations stated below. Recalculation can only be retroactive to the month in which the event that caused the recalculation occurred. The ineligibility period may only be eliminated or shortened for the remaining months when: (1) The Standard of Need for TAFDC or the standard of assistance for EAEDC is increased or changed for the ineligible assistance unit in accordance with 106 CMR 704.410 for TAFDC and 704.440 for EAEDC; (2) The lump sum income was used to pay for day-to-day living expenses and obligations in accordance with 106 CMR 704.240(B)(4), Verification shall be in accordance with 106 CMR 704.240(B)(4); As a direct result of a natural disaster, the ineligible assistance unit was required to spend all or a portion of the lump sum income on day-to-day living expenses as defined in 106 CMR 704.240(B)(4), and/or shelter, fuel, utilities, food and/or clothing costs above those amounts paid by the ineligible assistance unit for such costs the month immediately preceding the month the disaster occurred; provided, however, that the additional costs are limited to the actual costs or $2500, whichever is less. Verification of the natural disaster is a copy of a written report from the local fire or police department or Red Cross; (4) The ineligible assistance unit can no longer access the lump sum income because of a natural disaster and cannot pay for the day-to-day living expenses as defined in 106 CMR 704.240(B)(4) and/or shelter, fuel, utilities, food and/or clothing costs equal to or less than those paid by the ineligible assistance unit for the month immediately preceding the month the disaster occurred. Verification of the natural disaster shall be by a copy of a written report from the local fire or police department or Red Cross. Verification of the day-to-day living expenses shall be in accordance with 106 CMR 704.240(B)(4); (5) The ineligible assistance unit was required to spend the lump sum income because of an abusive relationship on day-to-day living expenses as defined in 106 CMR 704.240(B)(4), and/or shelter, fuel, utilities, food and/or clothing; or the assistance unit can no longer access the lump sum income and cannot pay for day-to-day living expenses as defined in 106 CMR 704.240(B)(4), and/or shelter, fuel, utilities, food and/or clothing; Verification of an abusive relationship shall be by a copy of court, medical, criminal, child protective services, battered victims' services, or law enforcement records that indicate the parent or absent parent might inflict physical or emotional harm on the child or relative if the ineligible assistance unit tried to access the lump sum income; or The lump sum income was used to pay for food, not to exceed the maximum SNAP allotment for a family of that size, provided the assistance unit is not otherwise eligible for SNAP. (G) Ineligibility for TAFDC. Any member of the filing unit who is ineligible for EAEDC due to lump sum income is concurrently ineligible for TAFDC. (H) Ineligibility for EAEDC. Any member of the filing unit who is ineligible for TAFDC due to lump sum income is concurrently ineligible for EAEDC.