What Happens To My Benefits
If I Get a Bunch of Money?
Each program, (TANF, SSI, MaineCare, etc.) has its own rules for what happens if you get
what is called "lump-sum income." We will explain the rules for each program.
Here are some types of "lump-sum" income that may count:
- SSI or Social Security retroactive awards
- Veteran’s retroactive awards
- Insurance settlements
- Workers compensation awards
- Divorce settlements
- Money you get when you sell a house, land or other things
- Lottery Winnings
- Income Tax Refunds
Table of Contents
Here is what happens if you are on the TANF program when you get lump-sum income:
TANF will not count the following parts of lump sum awards:
- Amounts paid out for attorneys fees
- Amounts earmarked in the award to pay for certain items, such as medical
expenses. The money must be actually used to pay for that earmarked cost.
- Up to $10,000, if within 30 days of getting the money, you deposit the
money in a separate account. There are only two types of separate accounts
that the money can be put into:
- an account, such as a savings or checking account, that is separate from
other money and which DHHS approves.
- a Family Development Account; this is a special account that you set up
to pay for education, training, starting a small business, buying or fixing
a home, etc. You need to contact either your local
Community Action Program (CAP)or contact Women,
Work and Community. They are the only organizations that can set up
these Family Development Accounts.
*The federal government will often match what you put into a Family Development
Account. So, if you put in $10,000, then the federal government will put
- Money used within the first thirty days to pay health care costs for a
member of your household
- Money used within the first thirty days to pay for an emergency, such
as to stop an eviction, foreclosure, utility termination, car/truck repair
so you don’t lose a job
- Money used to within the first thirty days to pay for other "essential
family needs approved by DHHS."
- Money used to pay for unexpected expenses. Examples are: funeral expenses,
travel costs related to illness, repair of a vehicle; payment of day to
day living costs, medical needs, clothing, and housing needs. It is not
enough to put aside money for these expenses. You must actually spend the
Here is what happens with what is left over from the lump sum.
Basically there is a penalty period during which you will not get TANF. The length
of the penalty period depends on how much money you have and how much TANF you usually get.
For example, if you usually get $486 per month and you have $12,000 left over then DHHS divides
$486 into the $12,000 and puts you off the TANF program for about 25 months.
- You can sometimes shorten the penalty period if you can show that some
unexpected emergency came up and you had to spend your
money. You should check with DHHS before you spend the money.
Here are some examples of things that you could spend the money on and shorten
It is not enough to put aside money for these expenses. You must actually spend
the money. You can also not pay bills ahead of time. You must wait until it
becomes an emergency.
- funeral expenses
- travel costs related to illness
- repair of a vehicle
- payment of day to day living costs
- medical needs
- housing needs, including payment to prevent an eviction or foreclosure
- payment of utility bills to prevent a disconnection.
Here are a couple of ways to avoid the lump-sum penalty.
Stop your TANF the month before you expect to get the lump-sum money. For example,
if you expect to get the lump sum in July, then in June drop out of the TANF program.
You need to do this as early as you can in June. If you do get TANF in July,
even after you have dropped out of TANF, do not spend the TANF and contact your DHHS
eligibility specialist right away to return the money.
This will not work after the fact. You cannot get the money in July and call DHHS in July
and say: take back my TANF for July.
Once you spend your lump-sum below the TANF limits, re- apply for TANF. Keep
receipts on how you spend the money, so you can prove that you no longer have
it, when you go back in to re-apply. Again, you only have 30 days from when
you get the money to spend it down below the $2000.00 asset limit.
Go here if you want to read the official TANF program rules
When you get a lump-sum while you are on MaineCare here is what happens:
- The lump-sum is considered to be “income” in the month that you get the lump-sum. You need
to report to DHHS that you have gotten any income. You must report this within 10 days of getting the money.
(SSI lump sum payments do not count as income.)
The lump-sum will not end your MaineCare for the month in which you get the money.
For example, if you get the lump-sum in July, you keep your MaineCare for July. You do not have
to pay anything back.
- In the next month, anything left over from the lump-sum counts as an "asset." It will count against
the asset limits in MaineCare. You need to get your lump-sum, and any other assets, below the asset limit
by any time in the month after you get the lump sum; otherwise you may lose your MaineCare.
Example: You get a lump-sum in July. It will count as an “asset” in August.
Basically, you can keep your MaineCare if you get your assets down below the limits on any
day in August. The basic asset limits for MaineCare are:
- $2000 if you are an elderly (65 or older) or disabled person ($3000 for a couple)
- $2000 if you are age 19 or older.
- $8000 if you are a disabled person who is working and under the Working Disabled program.
There are no asset limits for children under age 19, for pregnant women, for foster children
or those getting Transitional MaineCare.
Some things will not count as lump sum income.
For example, amounts set aside in any lump sum insurance award to be used to pay for
specific purposes, such as to pay attorneys fees or medical expenses do not count for up to six (6) months.
Some assets do not count.
Here is a partial list of assets that will not count:
- one vehicle (e.g. car, truck, motorcycle, snowmobile)
- a second vehicle if used to get to work, medical appointments, training, or to perform
other essential activities. (A vehicle modified to be used by or to transport someone with a disability
is also not counted.)
- a third vehicle, subject to certain limits.
- furniture and other household goods used for day to day living, including basic jewelry, like a wedding ring.
- house and lot, (it must be your primary residence)
- burial plot or burial insurance
- money set aside in what is called a Family Development Account or an Individual Development Account
- $8000 of savings for an individual, $12,000 for a household of 2 or more people
- assets of a step-parent (unless getting MaineCare)
- assets used to produce income or goods for home use
- retroactive SSI or Social Security awards to the elderly or disabled do not count as assets for 9 months
Keep receipts for how you spend your money.
If you don’t get your money below the limit, for at least one day during the month,
then you will lose your MaineCare. You can get your MaineCare back, once you go below the
allowed limits for assets.
In spending your money, you need to be careful. Sometimes you are allowed to make gifts
of your money to other people and that is legal. Sometimes, you may risk losing your MaineCare
if you do this. You need to speak with a lawyer before giving away any money.
Go here if you want to read
the actual MaineCare rules.
Lump-sum payments do not count as income. They do count as assets.
This means that when you get the lump-sum, it will count against the asset limits
and not the income limits for the Food Supplement program.
Note: If you are on the TANF or SSI and the Food Supplement program at the same time,
then what happens with your TANF or SSI controls what happens with your Food Supplement.
If you keep your TANF or SSI, then you keep your Food Supplement benefits.
Here are the things that do not count as assets in the Food Supplement program.
If you spend your money toward these things (such as improving your home or fixing your car),
then you may be able to keep your Food Supplements:
- Cash or bank accounts below $2000 ($3000 if you are over 65 or disabled)
- your home and the land it sits on
- real estate that is not your home and that you are making a good faith effort to sell
- your personal belongings and household furnishings
- one vehicle of any value; a second vehicle if:
- you use to live in
- you use to make a living (like a fishing boat or a taxi)
- you use to travel long distances so that you can work—like a car belonging to a
traveling salesperson, but not a car that you use for commuting every day
- you use to transport a physically disabled member of your household
- Any other vehicle will count, although the full value of that vehicle may not count.
- burial plots;
- the cash or face value of life insurance and pension funds;
- tools, equipment, livestock, buildings and other things you use to make money;
- any assets of someone who gets SSI or TANF;
- things that you can't sell for a significant return, like property that you own with several other people
Here is what happens if you do not get your lump-sum below the asset limits.
You will lose your Food Supplement. You will lose it until you get below the asset limits.
You must keep track of how you spend the money. You can not give the money away. You may have
to pay back your Food Supplements for any month that you are over the asset limits and you got Food Supplements.
If the lump sum that you get is to replace an asset that did not count for the Food Supplement program
(such as furniture that burned in a fire), then the lump sum will not count. You then need to spend that money
on something that will not count as an asset. Do this in the same month that you get the money.
Go here if you want to read the
actual Food Supplement rules.
Lump sum payments count as income in the month that you get it. In the next month,
the lump sum counts as an asset. Here is what happens to your SSI.
First, Social Security will look to see if the lump-sum you got puts you over the income
limits for the month you got both SSI and the lump sum.
For example, you get $684 of SSI in October. You then get a $20,000 lump sum in mid-October.
Since you are over the income guidelines for October, Social Security will send you a notice that
you were overpaid SSI for October. They will try to collect that $684 from you by reducing your
future SSI payments. You can ask Social Security to "waive" the overpayment.
Go here for more information on overpayment.
Second, the lump-sum you get will count against the $2000 limit on assets for a single person
and the $3000 limit for a couple getting SSI. When Social Security looks to see if you are over
the asset limit, they look at the first day of the month.
Example: You get a lump sum in October. You spend it down below the asset limit before
November 1st. You will not have an asset problem for November.
If your lump sum is from a back award of SSI or Social Security, then special rules apply.
For the first 9 months any back award will not count as an asset. It is important to keep this money
separate from any other money that you have.
If your lump sum is to replace an asset that was destroyed or damaged, then the lump sum may not
count for 9 months or more. This happens when the money you get is to replace something that
Social Security does not count.
Example: You own a car. The car is damaged and you get an insurance settlement
so that you can fix or replace the car. That money you get will not count for 9 months.
Social Security will not count any part of the lump sum that goes toward paying your legal fees.
In the case of an accident settlement, if medical expenses are paid, that money will not count.
Here are some things that you can spend your lump sum on. These will not count
against the $2000/$3000 asset limit.
- Buying or repairing a home. (If you sell your home and then plan to buy a new home,
you can keep the sale money for up to 3 months, and it will not count as an asset or income.)
- Household goods, such as furniture and clothing
- One vehicle of any value
- Property used in trade or business (for example, tools if you have a business)
- Money or property set aside for a Program to Achieve Self-Support or PASS.
This is a plan that you come up with and that Social Security must approve.
It is a plan for you to go back to school, start working, set up a business, etc.
Social Security then will not count the income or assets that you use for your PASS plan.
- Life Insurance (up to $1500 cash surrender value)
- Burial spaces and burial contracts are not counted. You can also set aside burial funds
up to $1500 in a separate account.
There are other things that will not count as assets. This is just a list of the most
common things that do not count.
Note: This information if general; it cannot address every circumstance. If
you have questions about whether something counts as an income or an asset for
any program, seek legal advice. Contact Pine
Tree Legal or MEJP.
Maine Equal Justice Partners
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