OKDHS - OAC 340:10-3-28. Lump sum payments

340:10-3-28. Lump sum payments

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Revised 6-1-08

Lump sum payments received from any source are considered as income. Changing a resource from one form to another is not considered a lump sum payment. • 1

(1) A nonrecurring lump sum payment considered as income includes payments based on accumulation of income and payments which are considered windfall in nature. • 2 Retirement benefits received at time of retirement in a lump sum are considered as unearned income. • 3 A non-recurring lump sum Supplemental Security Income (SSI) retroactive payment, made to a Temporary Assistance for Needy Families (TANF) recipient who is not currently eligible for SSI, is not counted as income or a resource for TANF purposes in the month paid and the following month. The amount remaining in the second month after the month of receipt is a countable resource. • 4
(2) The worker gives the person Form 08TA006E, Important Notice About the Effect of Lump Sum Payments on TANF Benefits, to ensure he or she has knowledge of the effect of lump sum receipt on eligibility. • 5
(3) A recipient who returns the cash assistance for the same month a lump sum is received is not considered a recipient for that month. The recipient must report the lump sum within 10 calendar days of receipt. The cash assistance must be returned within 10 calendar days from the date the lump sum is reported. • 6
(4) A person who receives a lump sum payment may request his or her needs be removed from the assistance unit if, in accordance with OAC 340:10-3-56, the person is not required to be in the assistance unit. If this person requests his or her needs be removed, the lump sum rule does not apply. If the person does not request his or her needs be removed from the assistance unit, the lump sum rule applies to the entire assistance unit.
(5) Ineligibility due to a lump sum payment received by a person required to be in the assistance unit in accordance with OAC 340:10-3-56 applies to all members of the assistance unit, including those not required to be in the assistance unit.
(6) Any remaining part of a lump sum payment received by a non-recipient prior to the date of application is considered as a resource.
(7) The lump sum rule is not applicable if the period of ineligibility was determined by another state prior to the person establishing residence in Oklahoma.
(8) Lump sum payments minus allowable deductions related to establishing the lump sum payment received by persons are considered as income. Allowable deductions are expenses earmarked in the settlement or award to be used for a specific purpose. • 7 Earmarked means an expense specifically set forth in the settlement or award. For earned income received in a lump sum, work related expense and one-half of the remainder are allowed as deductions for each month the earned income accumulated. The lump sum payment is added to all other countable monthly income considered in determining the amount of the TANF benefit including non-excluded child support payments received by the Child Support Enforcement Division. The TANF benefit is not included. If the total equals or exceeds the payment standard for the assistance unit size, the case is determined ineligible. • 8 The case remains ineligible for the number of months derived by dividing the total amount of monthly countable income plus the lump sum payment by the need standard for the assistance unit size.
(9) The lump sum payment is considered whether depleted or not until the period of ineligibility has expired. The period of ineligibility begins with the next possible effective date. • 9 Any income remaining is treated as other income received in the first month following the period of ineligibility.
(10) If the lump sum is received by a stepparent not included in the TANF unit, the stepparent's countable income including the lump sum is computed in accordance with the stepparent policy at OAC 340:10-3-57(f). Any portion of the lump sum income retained after the month of receipt represents a resource to the stepparent. The resource is considered in determining TANF eligibility only to the extent of the amount actually contributed to the assistance unit.
(11) In all cases where a lump sum payment has been or is expected to be received, the person must be advised of the lump sum rule. • 10 In all cases where the Oklahoma Department of Human Services (OKDHS) learns from a third party that a lump sum payment has been or is expected to be received, the person is advised within five calendar days of the lump sum rule. • 11
(12) The period of ineligibility may be recalculated and shortened when: • 12
- (A) an event occurs which, had the assistance unit been receiving TANF, would change the need requirement and the amount of payment including revision of the TANF Need Standard;
- (B) the income becomes unavailable due to circumstances beyond the person's control; • 13
- (C) the TANF assistance unit has incurred, incurs, or becomes responsible for and pays for an immediate family member's medical or funeral expenses; or
- (D) funds from the lump sum are expended to enhance employment. • 14
(13) Recurring lump sum income received from any source for a period covering more than one month is prorated over the period of time it is intended to cover, beginning with the month of receipt of a lump sum payment. • 15 On applications and active cases, it is considered as available for the period of time it is intended to cover even though it is depleted in less than that time. If the lump sum closes a case and the person later reapplies for TANF, the prorated amount is considered as income for the period of time it was intended to cover even if it has been depleted. Any remaining part of a recurring lump sum payment received by a non-recipient prior to the date of application is considered a resource.

INSTRUCTIONS TO STAFF 340:10-3-28

Revised 6-1-08

1. An example of changing a resource from one form to another is converting personal property to cash.

2. Payments considered windfall in nature include, but are not limited to, Veterans' benefits (VA) or Social Security lump sum payments, inheritances, gifts, worker's compensation payments, cash winnings, except those winnings derived from an established pattern of gambling, and personal injury awards. For exceptions, see OAC 340:10-3-5(9) for income tax refunds and OAC 340:10-10-7(5) for excess child support payments remaining after reimbursement of all Temporary Assistance for Needy Families (TANF) cash assistance.

3. See OAC 340:10-3-39 for recurring receipt of retirement benefits. See OAC 340:10-3-5(9) for retirement benefits received at termination of employment.

4. The worker must ask applicants if they have received a lump sum payment during the month of application, any month during the application process, or anticipate receiving a lump sum in the future. Recipients are asked at the time of periodic redetermination if the assistance unit has received or is expecting to receive a lump sum.

5. The person is requested to sign and date Form 08TA006E, Important Notice About the Effect of Lump Sum Payments on TANF Benefits. The original is given to the person and a copy filed in the case record. The worker provides an oral explanation, including examples of lump sum payments where the lump sum rule does or does not apply, the budgetary requirements of the lump sum rule, how the rule affects other benefits, and the importance of reporting anticipated receipt of a lump sum payment. When there is indication of anticipated receipt of a lump sum payment, the worker offers counseling regarding voluntary withdrawal of the application or case closure and availability of free legal advice.

6. (a) When the recipient agrees to return the cash assistance the worker advises the recipient to secure a money order made payable to the Oklahoma Department of Human Services (OKDHS) in the amount of that month's benefit. The money order and a memo including the recipient's name, case number, and reason the payment is being returned is mailed to FSSD, TANF Section.

(b) Family Assistance/Client Services (FACS), Case Notes, are updated.

(c) The worker makes and gives to the recipient as a receipt, a copy of the memo and the money order, if appropriate.

7. Allowable deductions or earmarked expenses include, but are not limited to, attorney's fees and court costs that are identified in the lump sum settlement and medical or funeral expenses for the immediate family.

8. See DHS Appendix 08AX001E (C-1), Schedule of Maximum Income, Resource and Payment Standards, Schedule IX.

9. See (12) of this subsection.

10 Advising the person includes budgetary requirements, effect on other benefits, counseling, options of voluntary application withdrawal or termination, and availability of free legal advice.

11. Within five calendar days of the date that the worker learns of a lump sum payment which will cause ineligibility or as soon as there is sufficient information to compute the period of ineligibility, the worker completes and mails or gives Form 08TA007E, Lump Sum Termination/Denial Notice, to the person. An oral explanation of the notice must be given to the person with information and assistance with an application for other benefits, if appropriate.

12. A decision by the worker to recalculate and shorten the period of ineligibility requires a detailed explanation in FACS Case Notes and necessary verification in the case record.

13.Examples of circumstances beyond the person's control include:

(1) theft;

(2) natural disasters;

(3) a member of the assistance unit takes the money and leaves the household;

(4) payment of overdue utility bills to avoid cut-off of essential utility services existing at the time the lump sum money is received; and

(5) payment of overdue rent or late mortgage payment to avoid eviction or foreclosure existing at the time the lump sum money is received.

14. Examples of expending funds from a lump sum payment for enhancement of employment include, but are not limited to, buying or repairing a car for purposes of employment, moving expenses to relocate for better job opportunities, or buying necessary clothing for job search or employment.

15. A recurring lump sum is money that is received in a lump sum recurrently such as annual rentals from surface or minerals, oil and gas production, cash winnings that are derived from an established pattern of gambling, and Windfall Profits tax refund. In instances where a person receives new income from oil and gas production and verification is not available, the worker accepts the available verification and averages the income over the period of time intended to cover. Income may be verified by seeing the person's production check stub or by contacting the oil and gas company. Cash winnings may be verified by seeing the person's Form(s) 1099 from the gambling establishment or by contacting the establishment. The income from cash winnings is annualized over a 12-month period even if the income is received over a period of time shorter than 12 months.

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