Some lump sums are paid for previous time periods; these are considered retroactive lump sums. We can only count the portion of a lump sum payment that is for a previous period as a resource. We count any portion that is for the current period as income. However, with prospective budgeting we normally will not be able to budget the current month's income against the household’s benefits.
Example: Bill was laid off from his job at a chicken processing plant in March. He received $3,000 in severance pay and $1,200 payout for accrued vacation leave.
- Because the severance pay is not for a previous period, we must count it as income for March. We count any remaining amount as a resource in following months.
- The payout of accrued vacation leave is for a previous period. We would count this portion of the payment as a resource.
Example: Sharon received a $6,000 lump sum payment of Supplemental Security Income (SSI) benefits in April. Sharon’s award letter indicated that her disability was approved for a fixed period of time and she will not receive ongoing benefits. The letter shows that $5,300 is for a prior period of time, but $700 of the payment is for the current month and next month’s benefits.
- We count the portion of the lump sum paid for prior months as a resource in April.
- We count the $700 portion that is not for a previous period as Sharon’s income.