Countable income and lump sum payments

Revised Date: 
March 4, 2015

Purpose: To explain the policies and procedures for determining countable income, including lump sum payments.

WAC 182-512-0700 SSI-related medical -- Income eligibility.

Effective April 14, 2014.

  1. In order to be eligible, a person is required to do everything necessary to obtain any income to which he or she is entitled including (but not limited to):
    1. Annuities;
    2. Pensions;
    3. Unemployment compensation;
    4. Retirement; and
    5. Disability benefits; even if their receipt makes the person ineligible for agency services, unless the person can provide evidence showing good reason for not obtaining the benefits.
  2. The agency does not count this income until the person begins to receive it. Income is budgeted prospectively for all Washington apple health (WAH) health care programs.
  3. Anticipated nonrecurring lump sum payments other than retroactive SSI/SSDI payments are considered income in the month received, subject to reporting requirements in WAC 182-504-0110. Any unspent portion is considered a resource the first of the following month.
  4. The agency follows income and resource methodologies of the supplemental security income (SSI) program defined in federal law when determining eligibility for WAH SSI-related medical or medicare savings programs unless the agency adopts rules that are less restrictive than those of the SSI program.
  5. Exceptions to the SSI income methodology:
    1. Lump sum payments from a retroactive SSDI benefit, when reduced by the amount of SSI received during the period covered by the payment, are not counted as income;
    2. Unspent retroactive lump sum money from SSI or SSDI is excluded as a resource for nine months following receipt of the lump sum; and
    3. Both the principal and interest portions of payments from a sales contract, that meet the definition in WAC 182-512-0350(10), are unearned income.
  6. To be eligible for WAH categorically needy (CN) SSI-related health care coverage, a person's countable income cannot exceed the WAH CN program standard described in:
    1. WAC 182-512-0010 for noninstitutional WAH coverage unless living in an alternate living facility; or
    2. WAC 182-513-1305(2) for noninstitutional WAH CN coverage while living in an alternate living facility; or
    3. WAC 182-513-1315 for institutional and waiver services coverage.
  7. To be eligible for SSI-related health care coverage provided under the WAH medically needy (MN) program, a person must:
    1. Have countable income at or below the effective WAH MN program standard as described in WAC 182-519-0050;
    2. Satisfy spenddown requirements described in WAC 182-519-0110;
    3. Meet the requirements for noninstitutional WAH MN coverage while living in an alternate living facility (ALF). See WAC 182-513-1305(3); or
    4. Meet eligibility for institutional WAH MN coverage described in WAC 182-513-1315.

This is a reprint of the official rule as published by the Office of the Code Reviser. If there are previous versions of this rule, they can be found using the Legislative Search page.

Clarifying Information

  1. Individuals may be required to report the receipt of a one-time payment under WAC 182-504-0105.
  2. In some situations, individuals will know beforehand that they will receive a one-time payment.
    1. If this happens, we include the payment as countable income with the effective dates described in WAC 182-504-0120.
    2. This may result in a suspension or termination of coverage.
  3. In most situations, individuals will not know that they are going to receive a one-time payment until they actually have it. If so, the payment does not affect the individual's eligibility for coverage because the individual's eligibility is always based on the prospective budget for the next month and, therefore, always determined before the individual can report receipt of the one-time payment.
  4. Some reasons all or part of the lump sum may become unavailable beyond the individual’s control include:
    1. The Individual loses the payment funds;
    2. The payment funds are stolen; and
    3. The Individual has unavoidable expenditures, such as medical bills or legal fees.
  5. We exclude a portion of the lump sum payment for 60 days in order to give the individual time to use the money for its intended purpose (repair or replacement of damaged or lost property or to cover medical costs).
  6. If an individual transfers the portion of the payment that counts as a resource for less than it is worth, they may have a period of ineligibility. See Transfer of an asset.
  7. If an individual received a lump sum payment while living in another state and a period of ineligibility was established in that state, the period of ineligibility does not carry over to this state.
  8. Compensatory awards, settlements, and retroactive benefits are often issued in several smaller payments instead of one large payment. These types of payments are considered unearned income.
  9. 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.

Worker Responsibilities

Individual Reports Before Receipt

  1. When an individual reports that they will be receiving a one-time payment, determine if you need any other information before taking action. You need to know the amount and date of receipt. If the individual did not provide this information at the time of report, request the information and allow 10 days for the individual to provide it.
  2. When you receive the information, enter the income for the months the individual expects to receive them, allowing 10-days advance notice.
  3. If the payment causes the medical assistance unit (MAU) to be over income for one month, suspend the coverage for that month.
  4. If the payment causes the MAU to be over income for two months, terminate the coverage and determine eligibility for other medical programs.
  5. If you do not have time to give the client 10-day notice, do not enter the payment as income in ACES.

Individual Reports After Receipt

  1. When a individual reports that they have received a one-time payment (which is the more common scenario), disregard the portion of the payment that is considered income in the month of receipt.
  2. If the payment causes the MAU to be over income for that month, suspend the coverage.
  3. If you do not have time to give the individual 10-day notice, do not enter the payment as income in ACES.

Individual Reports Untimely

  1. When an individual reports the receipt of a lump sum payment later than required under WAC 182-504-0110, determine the effective date as if they had reported timely. See WAC 182-504-0120.
  2. Create overpayments as appropriate. See Benefit Errors.

Individual Reports Compensatory Award or Settlement

  1. When an individual reports that they have received a compensatory award or settlement, determine the amount that is designated to repair or replace damaged or lost property or to cover medical expenses (WAC 182-512-0800(4)).
  2. If any portion is designated for these specific reasons:
    1. Do not count this amount for 60 days following the month of receipt.
    2. Set an alert to request verification of the amount that remains after the 60-day period.
    3. When you receive the verification, determine if the individual's total resources exceed the resource limit.
      1. If the resources are over the limit, terminate the benefits following adverse action requirements. See Client notices over.
      2. If the resources are under the limit, the individual remains eligible for benefits.
  3. For the portion not designated for the specific reasons:
    1. Request verification of the amount remaining after the month of receipt.
    2. When you receive the verification, determine if the individual's total resources exceed the resource limit.
      1. If the resources are over the limit, terminate the benefits following adverse action requirements. See Client notices overview. If the resources are under the limit, the individual remains eligible for benefits.

Note: When determining the value of the individual’s existing resources, do not include amounts the client spent within the month of receipt (or within 9 months of receipt for SSI and SSDI lump sum payments).