54. What is lump sum income and why is it such a problem?
You are about to receive a settlement from an accident.
You finally got back money from unemployment compensation.
Your luck has finally changed—or has it?
Lump sum income is money that you do not get regularly, such as a lottery award, an inheritance, a lawsuit award or settlement, or an award for back unemployment compensation. 106 C.M.R. § 704.240.
If you get this money while you are on EAEDC, you will be ineligible for EAEDC for a certain number of months. This number of months is equal to the amount of the lump sum divided by the EAEDC assistance standard for your household size, after deducting the first $600 in lump sum income. 106 C.M.R. § 704.240(D).
Example: Frances gets an EAEDC grant of $303.70 a month. She learns an aunt has died and she receives a $5,000 cash inheritance. She can deduct the first $600 from the inheritance amount. $4,400 divided by $303.70 is 14. Frances is ineligible for EAEDC for 14 months (and some of the lump sum will count against her grant when she goes back on in the 15th month).
There are additional expenses that can be deducted against the lump sum (see Question 55) and certain situations where, if you run out of the money, you can have the period of ineligibility recalculated (see Question 56).
- The lump sum rules only apply to money you get while you are on EAEDC. But if you got a lump sum within the 12 months before you applied for EAEDC, you may be subject to the transfer of assets rules. See Question 47. See DTA Transitions, Jan. 2004, p. 2.
- There is no lump sum rule for SNAP (food stamps) or MassHealth.
- Applying the lump sum to any money other than inheritances, lottery or other contest winnings, or damage awards may be illegal. Consult an advocate.
- Money in a pension fund is an asset and therefore should not be countable as income when it is withdrawn on a one-time basis, but DTA has said that a one-time withdrawal from pension funds may be considered lump sum income. See DTA Transitions, Feb. 2014, p. 5. DTA’s position may not be correct or legal. Consult an advocate.
Retroactive EAEDC benefits are not countable as income and therefore are not subject to the lump sum rule, 106 C.M.R. § 704.250(CC), and also are not countable as an asset in the month of receipt or the following month. 106 C.M.R. § 704.140(X).