1650 Budgeting Lump Sum Income | TANF

Georgia Division of Family and Children Services
TANF Policy Manual

Policy Title:

Budgeting Lump Sum Income

Effective Date:

May 2023

Chapter:

1600

Policy Number:

1650

Previous Policy Number(s):

MT 52

Updated or Reviewed in MT:

MT-72

Requirements

Lump sum income received by a lump sum budget unit member is used to determine a period of ineligibility.

Basic Considerations

Lump sum income is nonrecurring income that equals or exceeds 100% of the federal poverty level (FPL).

Nonrecurring income that is less than 100% of the FPL is not subject to lump sum budgeting. This income is budgeted as any other income. Accrual rights policy applies.

Nonrecurring income is income that is received less frequently than monthly. If income is received from the same source for the same individual in the month immediately preceding the month in which the lump sum income is received, the income is recurring, and lump sum budgeting is not applied.

Lump sum budgeting applies regardless of whether the assistance unit (AU) continues to have the money on hand. Refer to Shortening the Period of Ineligibility in this section for exceptions.

Lump sum budgeting is used to determine a period of ineligibility when lump sum income is received by any of the following individuals:

an eligible AU member
an ineligible parent
a disqualified individual
a penalized individual.

Only individuals who are subject to standard filing unit (SFU) requirements are penalized. Individuals who are not members of a SFU and who fail to meet an eligibility requirement are removed from the AU. Lump sum income received by the non-SFU individual does not affect the remaining members of the AU.

Lump Sum Budget Unit

The lump sum period of ineligibility affects only those individuals who are members of the lump sum budget unit.

The lump sum budget unit includes the following:

an individual who is a member of the lump sum recipient’s SFU in the month in which the lump sum income is received,
an individual who would be a member of the lump sum recipient’s SFU in the month in which the lump sum income is received except that the individual is an ineligible parent or is penalized or disqualified.

Lump sum income received by an individual who is a member of the lump sum budget unit but who could be excluded from the AU does not affect the other members of the lump sum budget unit.

For example, a mother receives cash assistance for herself, her daughter and her daughter’s baby. The baby receives lump sum income. Because the baby is not required by standard filing unit policy to be included in the AU with his/her mother and/or grandmother and the baby is not financially responsible for either, the baby’s lump sum income is used only to determine his/her own period of eligibility.

Individuals who are included in the AU when the lump sum income is received but who are not members of the lump sum budget unit are not affected by lump sum budgeting.

A nonparent grantee relative who is included as a caretaker and who receives lump sum income will have his or her own period of lump sum ineligibility. The eligibility of the children for whom s/he receives cash assistance is not affected by the lump sum.

The AU member who receives the lump sum income must be correctly receiving cash assistance in the month of receipt of the lump sum income for lump sum budgeting to apply.

In order for lump sum budgeting to apply to the lump sum income of an ineligible, penalized or disqualified individual, a member of the lump sum budget unit must be correctly receiving cash assistance in the month of receipt of lump sum income.

Refer to Section 1205, Assistance Units, for information on SFU policy.

Period of Ineligibility

The period of ineligibility is calculated using the lump sum income and 100% of the FPL for the number of people included in the lump sum budget unit.

The period of ineligibility is determined by dividing the lump sum income by 100% of the FPL. The result is the number of months the lump sum budget unit is expected to meet its needs with the lump sum income.

Effective Month of the Period of Eligibility

Accrual rights policy is not applicable when determining the first month of the lump sum period of ineligibility. The period of ineligibility begins with the month in which the lump sum income is received. Therefore, an overpayment may exist for the month of receipt of the lump sum income and must be recovered.

Types of Lump Sum Income

Lump sum income may be unearned or earned. Unearned lump sum income includes the following:

accumulated or retroactive payments, such as RSDI benefits, unemployment
compensation, child support, or worker’s compensation,
funds from a court settlement
capital gains
inheritance
insurance payment for death, accident and/or injury
lottery winnings
windfall

This list is not all-inclusive.

CSE payments resulting from an administrative procedure, delay or error are not budgeted as lump sum income.

Earned lump sum income includes the following:

severance pay
bonus

This list is not all-inclusive.

Earned income deductions are allowed if the individual receiving the lump sum income is entitled to the deductions.

Informing the AU of Lump Sum Policy

Every AU must be provided with the following information about lump sum income:

the responsibility to report and verify the receipt of lump sum income before spending it,
the effect that the receipt of lump sum income will have on the AU’s eligibility for cash assistance,
the possibility of an extended period of ineligibility during which the lump sum budget unit must use the lump sum income to meet living expenses.

The AU must be provided with this information at the following times:

application
review
when lump sum income is anticipated or received.

Determination of the Net Amount of Lump Sum Income

Legal restrictions placed on the use of the lump sum income affect the amount used in calculating the period of ineligibility. The restricted amount is verified and deducted from the lump sum income. The following are examples of legal restrictions:

amounts restricted for use when the individual reaches a specified age,
amounts restricted for specific expenditures other than daily living expenses.

This list is not all-inclusive.

Voluntary restrictions placed on the use of the lump sum income cannot be considered in determining the net countable lump sum income.

The following expenses are also deducted from the lump sum income:

legal fees incurred in obtaining the lump sum income. These fees are often deducted before the lump sum income is paid.
expenses for the purpose for which the lump sum income was intended, such as the following:
- medical expenses resulting from an accident
- funeral or burial expenses
- replacement or repair of a resource.

This list is not all-inclusive.

The net countable lump sum income is the amount remaining after deducting restricted amounts and allowable expenses.

The lump sum period of ineligibility is calculated by dividing the net countable lump sum income by 100% of the FPL for the lump sum budget unit. The result will be rounded up and is the number of months the lump sum budget unit is expected to meet its needs with the lump sum income.

Calculation of the Lump Sum Period of Ineligibility

No other income is counted in determining the period of ineligibility.

If verification is not immediately available, the AU’s statement of the required information is used to calculate an initial period of ineligibility. Refer to Verification of Lump Sum Income in this section.

When verification is received, the period of ineligibility is recalculated if there are any changes in the verified information.

Informing the AU When the Receipt of Lump Sum Income is Reported

The AU must be provided with the following information when receipt of lump sum income is reported:

the individual’s ineligible based on receipt of lump sum income,
the effective date of closure, or the effective date of removal from the AU of the lump sum budget unit members,
the period of ineligibility,
how the period of ineligibility was calculated,
how the period of ineligibility may be shortened,
the amount of any overpayment for which the AU is responsible, unless a fraud referral is pending,
the effect of the lump sum income on potential eligibility for other individuals, and
the month in which the AU or the lump sum budget unit members may reapply.

For the purpose of initially informing the AU of the period of ineligibility, the AU’s statement of the required information about the lump sum income is used if verification is not immediately available. Refer to Verification of Lump Sum Income in this section.

Verification of Lump Sum Income

The following information about lump sum income must be verified from the source:

who received the lump sum income
the amount of the lump sum income
the date on which the lump sum income was received
legal restrictions placed on the use of the lump sum income
allowable expenditures paid from the lump sum income.

If the AU is unable to obtain the verification, the agency must attempt to obtain verification from the source.

If the AU fails or refuses to verify the above information, future cash assistance eligibility cannot be established. Termination of cash assistance continues to be based on lump sum budgeting and not on a failure to cooperate or failure to provide verification.

If verification is provided at a future date and the period of ineligibility can be determined historically, future cash assistance eligibility can be established.

Shortening the Period of Ineligibility

The lump sum period of ineligibility may be shortened because of changes in circumstances, including the following:

The budgeted lump sum income or a portion thereof becomes unavailable to the lump sum budget unit because of theft, loss or involuntary placement of legal restrictions upon the lump sum income.

The period of ineligibility cannot be shortened if the lump sum income is voluntarily placed in an inaccessible account or trust fund.
An individual who has access to the lump sum income takes the lump sum income and moves from the home.
Expenditures are made for a casualty or a disaster loss considered an act of God, such as fire, flood, severe storm or earthquake.
Expenditures are made to prevent eviction or to secure housing after eviction. These expenditures may be used only twice during a period of ineligibility. An eviction notice is required prior to shortening the period of ineligibility.
Expenditures are made to avoid disconnection of utilities. These expenditures may be used only twice during a period of ineligibility. A notice of disconnection is required prior to shortening the period of ineligibility. The period of ineligibility is not shortened if sufficient emergency energy assistance is available to avoid disconnection.
Expenditures are made to move from substandard housing, to pay for essential repairs to the home, or for replacement of an essential appliance.
Expenditures are made for unreimbursed funeral expenses of the following individuals:
- a member of the lump sum budget unit,
- the spouse, parent or minor child of a member of the lump sum budget unit,
- a child for whom an individual in a lump sum period of ineligibility continues to receive cash assistance.

Receipts for all expenditures are required prior to shortening the period of ineligibility.

A lump sum period of ineligibility is not shortened when the FPL is increased.

A lump sum period of ineligibility is never extended.

Reapplication Following the Period of Ineligibility

The AU must be informed that it may apply for cash assistance in the last month of the period of ineligibility if temporary assistance is still needed.

None of the original lump sum income is counted as income following the period of ineligibility. Any of the lump sum income on hand after the period of ineligibility is counted as a resource.

Refer to Chart 1650.1 for treatment of lump sum income in special situations.

The following chart is used to determine the treatment of lump sum income in specific situations:

Chart 1650.1 - Special Considerations in Lump Sum Budgeting
IF	THEN
lump sum income is received in the month of application but prior to the date of application	the AU must be advised of the effect the lump sum income would have on eligibility and the right to postpone filing an application. If the AU elects to file an application, lump sum budgeting is applied.
the AU anticipates receipt of lump sum income during the application process	the AU must be advised of its right to withdraw the application to avoid lump sum budgeting. If the AU elects to continue with the application, lump sum budgeting is applied if lump sum income is received.
lump sum income is received during the application process	lump sum budgeting applies.
lump sum income is received after denial or after withdrawal of the application	lump sum budgeting does not apply.
lump sum income is received in the month of application, but the AU is ineligible for another reason	lump sum budgeting does not apply.
lump sum income is received in the month of application but after approval	lump sum budgeting applies.
an individual is in a lump sum period of ineligibility imposed in another state	the lump sum period of ineligibility does not follow the individual from the other state.
lump sum income is received in an active case but the AU is ineligible for another reason	lump sum budgeting does not apply.
lump sum income is received jointly with an individual(s) who is not a member of the lump sum budget unit	the net lump sum income is prorated among the individuals for whom the lump sum income is intended. The period of ineligibility is based on the lump sum budget unit’s pro rata share of the lump sum income.
lump sum income is received by an individual whose income is deemed to the AU	lump sum budgeting does not apply.
subsequent lump sum income is received during the period of ineligibility	lump sum budgeting does not apply to the subsequent lump sum income.
an individual who is ineligible because of receipt of lump sum income leaves the home	the individual remains ineligible for cash assistance for the predetermined period.
an individual, including one who is a member of the SFU of the lump sum recipient, moves into the home and benefits are requested	the lump sum period of ineligibility does not apply to this individual. The lump sum income is not considered in determining eligibility for this individual. All other applicable budgeting procedures are used.

Procedures

Calculating a Period of Ineligibility When Lump Sum Income is Reported

Follow the steps below when the AU reports receipt of lump sum income:

Step 1	Determine if the income received meets the definition of lump sum income.
Step 2	Determine who is included in the lump sum budget unit as follows: establish who received the lump sum income, establish who is included in the lump sum recipient’s SFU establish who would be included in the lump sum recipient’s SFU if that individual were not an ineligible parent or a penalized or disqualified individual.
Step 3	Accept the AU’s statement, if verification is not immediately available, of who received the lump sum income, the amount of the lump sum income, the date on which it was received, legal restrictions placed on its use and allowable expenditures.
Step 4	Determine the net countable lump sum income by subtracting from the gross lump sum income any amounts legally restricted and amounts for allowable expenses.
Step 5	Divide the net countable lump sum income by 100% of the FPL for the lump sum budget unit to determine the number of months the lump sum budget unit is ineligible.
Step 6	If verification was not provided when the lump sum income was reported, verification must be requested from the AU.
Step 7	Process the termination in the system and mail the system-generated notice.
Step 8	Schedule any overpayments that result because of receipt of lump sum income.

Shortening the Period of Ineligibility

Follow the steps below when an event occurs that requires that the period of ineligibility be shortened:

Step 1	Determine the amount of the lump sum income that is considered still remaining as follows: Establish the number of months remaining in the period of ineligibility. Multiply the number of months above by 100% of the FPL amount used in the original calculation of the period of ineligibility.
Step 2	Subtract the allowable expenses or the amounts that are unavailable from the amount obtained in Step 1.
Step 3	Divide the amount obtained in Step 2 by 100% of the FPL amount used in the original calculation of the period of ineligibility. The result of this calculation is the length of the new period of ineligibility. The remainder from this calculation is not counted as income in any month.
Step 4	Send system generated notice completing all the required information.