421 Lump Sum Payments

Effective Date: November 1, 2021

No Previous Policy

A.   Introduction

Lump sum payments are windfalls or retroactive payments of earned or unearned income.  Lump sums include settlements from personal injury suits, insurance settlements, awards, winnings, and gifts.  They also include lump sums consisting of Social Security and Railroad Retirement benefits, VA lump sums, unemployment compensation lump sums, and other one-time payments.  Federal tax refunds, including refundable credits such as Earned Income Tax Credit (EITC) and Child Tax Credit payments are not lump sum payments.  Payments that will recur, even if only once a year, are not lump sum payments.

B.   Exempt Lump Sum Payments

Some kinds of lump sum payments are exempt as income. Exempt lump sum payments include:

1.    Any kind of lump sum payment of excluded earned or unearned income. If that kind of income is excluded, the lump sum payment is also excluded. (See Sec. 417.)  

2.    Insurance settlements for destroyed exempt property. (See Sec. 415-9.)

3.    Veteran's benefits and child support payments are not countable income. Any lump sum payment consisting of VA or child support payments are not counted as income for the MAGI-based eligibility groups.

4.    Death benefits

If death benefits are paid in a lump sum, include in your income only the benefits that are more than the amount payable at the time of the insured person's death. If the benefit payable at death is not specified, count the part of the benefit payments that are more than the present value of the payments at the time of death.

5.    Money received from a TPL source for medical expenses-

o    If the money will be recouped by ORS. 

o    If the individual paid the entire cost of the accident or health plan, or were partially paid for by the employer but that amount was counted as part of the employee’s earnings.

o    Black lung benefit payments

o    Other sickness and injury benefits may be countable. Contact the Medicaid policy or program specialist to verify specific insurance types.

6.    Count as income all lump sum payments that are not listed above. (For information about money received under a contract. see Sec. 415-8.)

C.   How to Count Lump Sum Payments

 

Count the net lump sum payment as income only for the month it is received.  This could be during a retroactive month or the application month.  The individual might report a lump sum for the first month of the new certification period (if the date and amount of the lump sum is known.)  Do not prorate the lump sum payment over the certification period when determining the CHIP income for the upcoming certification period. Notice requirements apply for a change to eligibility.  See section 811.

 

D.  When to Report Lump sum Payments to ORS

Report all lump sum payments to the Office of Recovery Services, Medical Section if the payment could possibly be considered a third party liability payment. ORS will evaluate the payment for possible recoupment. Examples of such lump sum payments are insurance settlements, payments from trusts set up for medical support, settlements on personal injury suits, or reimbursements from a health insurance plan.