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

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

3. 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

4. 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

5. 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

6. 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

7. 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?

8. 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?

9. 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

10. 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.

11. 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

12. 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

13. 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

14. 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

15. 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.

16. 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)

17. 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

18. 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.

19. 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

20. 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

21. 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

22. 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

23. 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

24. 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

25. $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

26. 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)

27. 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.

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

29. 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

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

31. 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.

32. 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

33. 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?