411  LUMP SUM PAYMENTS

Lump sum payments are windfalls or retroactive payments of earned or unearned income.  Lump sums include inheritances, insurance settlements, awards, winnings, and gifts.  They also include Social Security Lump sums, VA lump sums, unemployment compensation lump sums, and other one time payments.  Earned Income Tax Credit (EITC) payments are NOT lump sum payments.

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

1. Any kind of lump sum payment of excluded unearned income.  If that kind of income is excluded, the lump sum payment is also excluded.  (See Section 402-4)

2. Insurance settlements for destroyed property.

3. SSA reimbursements of Medicare premiums.

4. Money received for medical expenses, if the money will be used to pay those expenses.

Count the net amount of all lump sum payments that are not listed above if they will be received during the 12 month certification period and if the amount can be determined.  (For information about money received under a contract, see Section 415-3 #4.)

The net amount is the portion of a lump sum left after excluding:

1. Legal fees expended in the effort to make the lump sum available.

2. Payments for past medical bills.

3. Funeral or burial expenses, if the lump sum was intended to cover funeral or burial expenses.