Oklahoma Department of Human Services
Sequoyah Memorial Office Building, 2400 N. Lincoln Blvd. • Oklahoma City, OK 73105
(405) 521-3646 • Fax (405) 521-6684 • Internet: www.okdhs.org
 
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 6-1-13 

 

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

2.   (a) Payments considered windfall in nature include, but are not limited to:

(1) Veterans' benefits (VA) or Social Security lump sum payments;

(2) inheritances;

(3) gifts;

(4) worker's compensation payments;

(5) cash winnings, except those winnings derived from an established pattern of gambling; and

(6) personal injury awards. 

(b) For exceptions, refer to OAC 340:10-3-5(a)(9) and (b)(16) for income tax refunds and OAC 340:10-10-7(b)(5)(A) for excess child support payments remaining after reimbursement of all Temporary Assistance for Needy Families (TANF) cash assistance.

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

4.   (a) During the application interview, the worker must ask the applicant if any member of the assistance unit received a lump sum payment during the application month or anticipates receiving a lump sum in the future. 

(b) During the benefit renewal, the worker must ask if the recipient or any member of the assistance unit received a lump sum payment since the application or the last benefit renewal or expects to receive a lump sum in the future.

5.   (a) At the time of the application or benefit renewal interview, the worker orally explains the information contained on Form 08TA006E, Important Notice About the Effect of Lump Sum Payments on TANF Benefits, including:

(1) examples of one time money considered as lump sum payments;

(2) the lump sum rule and how it affects TANF receipt and other benefits;

(3) the assistance unit's reporting responsibilities;

(4) how the ineligibility period is figured and how it may be shortened; and

(5) the importance of reporting anticipated receipt of a lump sum payment. 

(b) After providing an oral explanation, the worker asks the applicant or recipient to read, sign, and date Form 08TA006E. 

(c) When the person indicates he or she anticipates receipt of a lump sum payment, the worker advises the person how he or she may avoid application of the lump sum rule and receive free legal advice.

(1) Prior to receipt, the person may:

(A) voluntarily withdraw the application; or

(B) request closure of the TANF benefit.

(2) After receipt, the person may repay the TANF cash assistance within 10 calendar days of receiving the lump sum payment.

(d) The worker images and files a copy of Form 08TA006E in the case record and gives the applicant or recipient the signed and dated original.

6.   When the recipient agrees to return the TANF 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.  After receiving the money order, the worker:

(1) sends a memo to the Adult and Family Services (AFS) TANF Section explaining the recipient received a lump sum payment for a certain month and requesting the attached money order be applied to the recipient's case name and number for the month of lump sum receipt;

(2) documents lump sum receipt and case action in the Family Assistance/Client Services (FACS), Case Notes; and

(3) gives the recipient a copy of the memo and the money order as a receipt, when appropriate.

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

8.   Refer to the OKDHS Appendix C-1 (.pdf, 8 pp, 313 KB), Maximum Income, Resource and Payment Standards, Schedule IX to calculate the TANF payment standard.

9.   The worker calculates the ineligibility period for the same time frame regardless of whether the client reports the lump sum timely or does not report the lump sum.  The difference is in whether the worker writes an overpayment and the number of months included in the overpayment.  In examples (1) through (3) of this Instruction, the client receives the lump sum on April 3rd and the worker calculates the ineligibility period from May 1st through January 31st.

(1) The client timely reports lump sum receipt on April 11th.  The worker closes the TANF benefit effective May 1st.  No overpayment exists.

(2) The client untimely reports the lump sum receipt on May 28th.  The worker closes the TANF benefit on July 1st and writes an overpayment for the months of May and June.

(3) The client does not report lump sum receipt.  The worker discovers the lump sum on November 11th while completing the TANF benefit renewal.  The worker closes the TANF benefit effective December 1st and writes an overpayment for the months of May through November.

10. Advising the person of the lump sum rule includes orally explaining the information contained on Form 08TA006E and how to obtain free legal advice.

11. Within five calendar days of the date the worker learns of a lump sum payment making the person ineligible, or when the worker has sufficient information to compute the period of ineligibility, the worker completes and mails or hand delivers Form 08TA007E, Lump Sum Termination/Denial Notice, to the person.  The worker must orally explain the notice and provide the person with information and assistance to apply for other benefits, when appropriate.

12. When the worker decides to recalculate and shorten the ineligibility period, the worker must provide a detailed explanation of the circumstances in FACS Case Notes and image applicable documents 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 received in a lump sum on a regular basis such as annual rentals from surface or minerals, oil and gas production, cash winnings resulting from an established pattern of gambling, and Windfall Profits tax refunds.  When a person receives new income from oil and gas production, the worker accepts the available verification and averages the income over the period of time intended to cover.  The worker may verify income from oil and gas by seeing the person's production check stub or by contacting the oil and gas company.  The worker may verify cash winnings by seeing the person's Form(s) 1099 from the gambling establishment or by contacting the establishment.  The worker annualizes income from cash winnings over a 12-month period even when the income is received over a period of time shorter than 12 months.

Last Updated:  4/2/2014