Government Benefits for Low Income Families TANF Food Stamps Subsidized Housing Veterans Pension

The Jones Family Donna – Single parent Tim – 1 year old Jenny – 3 year old Sarah - 5 year old and disabled

Benefits for the Jones Family Donna, Tim and Jenny – TANF 3 person grant - $500/mo Sarah is disabled and on SSI - $623/mo Food stamps - $222/mo Section 8 rent - $337 (FMV rent $800) Medicaid coverage for everyone

Donna is going to receive a $200,000 lump sum settlement How will it affect the family’s TANF grant? What if Donna elects a structure paying $900 per month for lifetime? How will lump sum or structure affect Sarah’s SSI? After an injury, clients need help with numerous issues, including health insurance, available benefits to help pay the bills and provide needed services You need to know your client’s thoughts about importance of maintaining benefit eligibility versus retaining control over the funds They need to understand the structured settlement as an option You may be able to get benefits in place prior to settlement that maximizes the value of the settlement to the client

TANF Temporary Assistance to Needy Families Since 1996 a block grant program Rules are left to the states other than Work requirements Time limits on assistance Citizenship requirements Most states adopted rules of existing AFDC program

TANF: Other items of note Generally TANF recipients qualify automatically for Medicaid Generally a household in which all members receive TANF and/or SSI automatically qualifies for food stamps

Impact of Donna’s Receipt of Lump Sum on TANF benefit Is the receipt of the settlement treated as income or an asset? Is there an asset test? Is there a transfer of asset penalty? If so Purchase exempt assets Transfer assets to a trust if there a trust option in your state for non-disabled parent to shelter assets?

Options to Preserve TANF Purchase exempt resources Transfer assets to a trust if there is a trust option in your state for non-disabled parent to shelter assets?

Is there a long term impact of receipt of lump sum? Is there prospective budgeting for lump sum income in your state? If so, how can prospective budgeting be avoided

What if Tim or Jenny receive the lump sum of $200,000? Is minor’s settlement considered available to rest of assistance unit? Can minor child be removed from assistance unit? Is there a trust or blocked account option for minor’s settlements? Can the payments be postponed until the child is 18? With lead time, we were able to get the client qualified for Medicaid quickly by setting up a special needs trust immediately and transferring existing assets into trust. We got the client on the Medicaid waiver program, so any allocation to his wife for her loss of consortium claim did not affect his eligibility We allocated a larger amount than we might otherwise have to the consortium claim, and the wife agreed to pace the funds in an irrevocable trust which provided that if she divorced or left the client, she would be entitled to a fixed sum with the remainder to stay in the trust for the benefit of client and the children.

What will be the impact of Donna’s lump sum on Sarah’s SSI? Assets of parent are imputed to disabled child receiving SSI until 18 Gift by parent of lump sum not attributed to minor disabled child – i.e. no penalty

Impact of Donna’s Receipt of $900/mo Structured Settlement Family will lose TANF automatic Medicaid and food stamps SSI child’s grant may be reduced due to income deeming

How will Donna’s settlement affect the Food Stamp Grant? Who is in the Food Stamp household? People living together and preparing meals together; Children under 22 must be in same food stamp household with parent if they live together

The Jones Food Stamp Household Donna Jenny Tim Sarah A family is categorically eligible for Food Stamps if all members of household receiving TANF or SSI

Asset Limit for Food Stamps Assets of everyone in the Food Stamp household taken into account Countable assets of everyone in household must be below $2,000 unless household member 60+ or receiving disability income. Countable asset limit is $3,000 if at least one household member is 60+ or receiving disability income.

Disregarded Assets Home Personal belongs/household effects CSV of life insurance & pension funds (but not IRA or Keogh acct.) $1,500 burial contract per person Assets disregarded by SSI or TANF Vehicle (value varies per state)

Affect of Settlement on the Jones Food Stamp Household The Jones’ countable asset limit - $3,000 (disabled child in household) If Donna or a child receive $200,000 lump sum it puts the household over the $3,000 asset limit

Options to Protect Food Stamps Purchase exempt assets (home, car, household furnishings, etc.) If Donna structured her settlement, assets could stay below $3,000 asset limit but monthly structure payments will be “income” affecting the amount of food stamps for the household.

Can Lump Sum Be Sheltered in Trust? Food Stamp trust rule a. Trustee cannot be family member b. Trust only for education or medical expenses SNT for SSI household member would not be countable asset if disregarded by SSI

Food Stamp Transfer of Asset Rule Maximum transfer penalty – 1 year No penalty if gift was exempt asset No penalty if not on Food Stamps when gift made and wait at least 3 mo. Should Donna give away her lump sum

How Does Income Affect Food Stamps The income of all household members will affect the amount of food stamps awarded to the household. If Donna structures her lump sum the payments will be “income” that can affect the household food stamp amount

Food Stamp Calculation TANF grant $ 500 SSI for Sarah $ 623 Total household income $1,123 Minus standard deduction -$139 Net monthly income $ 984 Multiply net income by .3 $ 296 Max. benefit for family of 4 $ 518 $518 - $296 = actual food stamps $ 222

Section 8 Benefits Section 8 financial eligibility is based on income, not assets Income from assets is counted Either actual income or Imputed income based on current passbook savings rate for net family assets in excess of $5000 Income from transferred assets is counted for 2 years following transfer

How will Donna’s $200,000 settlement affect her Section 8 rent? Lump sum addition to net family assets is not income The lump sum itself will have no effect on eligibility Income from lump sum will count Income will be imputed from the asset even if the lump sum is given away

$200,000 Lump Sum If passbook savings rate is 2%, imputed income is $ 333 per month and rent will increase by $100 a month $900/mo structured settlement Rent will increase by $270 per month

Potential Lost Benefits from Donna’s Settlement TANF $500 SSI for Sarah (deeming problem) $623 Food Stamps $222 Rent subsidy if income too high $463 Replace lost Medicaid for Donna $500 Total lost benefits $ 2,308/mo. $27,696/yr. There is information in the handout which addresses eligibility for SSDI, CDB and DAC SSDI is available 5 months after the person is disabled. Children disabled prior to age 22 get DAC or CDB benefits when a parent retires, dies or becomes disabled Medicare kicks in 24 months after SSDI begins. This is why COBRA benefits have an extension period for persons who are disabled – ensure that your client files the necessary notices to get this extension if they want/need the COBRA benefits until Medicare is available Shorter waiting period end stage renal disease, one month for Amyotropic Lateral Sclerosis (Lou Gehrig’s disease)

Veterans Low Income Pension Jim is 56 years old and married Served in Viet Nam in 1974 Permanently disabled with diabetes Jim will be getting a settlement from auto accident of $200,000.

Veterans Pension Jim receives VA pension of $910.75 (he has no other disability income to offset VA pension Wife’s dependent pension of $282 Receives free care at VA hospital

How Will Settlement Affect Pension Asset test: Are there sufficient assets that a part of assets can be consumed for the veteran’s maintenance. Home and personal effects disregarded Rumored asset limit - $80,000

How Would Structure Affect Pension Income, including structure payments, will offset VA pension dollar for dollar.

How VA Treats Receipt of Lump Sum Lump sum is annualized for 12 months. If Jim receives lump sum of $200,000 it will be treated as income of $16,666 for the next 12 months. That will eliminate pension for 12 months.

Options to Protect Pension Benefit If Jim terminates pension benefit before receipt of lump sum, can he avoid annualizing income? Purchase exempt resource: house or personal effects Give away lump sum – no transfer penalty

Grantor Special Needs Trust Can Jim shelter settlement in d(4)(A) SNT? No VA trust regulations but note Opinion Letter VAOPGCPREC 33-97 Will Jim still meet the subjective need requirement if there is a SNT?