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Minnesota Department of Human Services Child Care Assistance Program (CCAP) Policy Manual
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6.15.15 Annualizing Lump Sum Income

ISSUE DATE: 10/2018

See Chapter 6.6 (Earned/Unearned Income) for information on included lump sum income.

Lump sum income can be earned or unearned. Examples of lump sums include child support arrears, an inheritance, an insurance payment, and gambling winnings.

Lump sums received by CCAP recipients

Families are required to report receipt of lump sum income during the 12-month eligibility period if the income puts the family over the maximum allowed for their family size (85 percent of SMI).

At redetermination, families must report any lump sum payments received during the previous 12-month eligibility period. See Chapter 8.3 (Reporting Requirements).

At redetermination, when a lump sum is verified:

  • · Determine if the income should be included in the household income,
  • · If included, do not count the first $60 in lump sum income received in the calendar quarter. Track this $60 amount as a cumulative total for each calendar quarter.
  • · Divide the total remaining amount by 12 months or 26 2-week periods and apply an equal amount throughout the entire year, AND
  • · Determine if the family remains eligible. If eligibility continues, determine the new copay amount.
  • During the 12-month eligibility period, if there is another change in the family’s income, the lump sum amount will need to be adjusted to include the remaining months/weeks. Include the remaining amount of the lump sum in the new annualization.

    Count the annualized lump sum effective the date of receipt. Continue counting the lump sum for 12 months or 26 2-week periods from the date of receipt.

    MEC² is not yet programmed to annualize lump sum income with the $60 quarterly exemption according to CCAP policy. Follow instructions in the MEC² User Manual to enter lump sum income in the appropriate income type category with an accurate received date and to add a lump sum exemption.

    Lump sums received by CCAP applicants (prior to application)

    If lump sum income is received prior to CCAP participation, the lump sum is NOT included in the CCAP household income. However, if a CCAP participant receives a lump sum income, the case closes and the family’s reapplies during the original annualization period, continue to count the lump sum through the end of the original annualization period. Do not start a new annualization period.

    Lump sum reporting and overpayments

    When a lump sum income IS reported timely, and the income puts the family over 85 percent of SMI, request verification of the lump sum and allow 15 days for the family to return the verification before closing the case. See Chapter 7.1 (Verification due dates) and Chapter 7.4 (Verification – 12-month eligibility period).

  • · If verification confirms the family is not eligible, close the case with a 15-day notice of adverse action.
  • · If verification is not provided within 15 days, close the case with a 15-day notice of adverse action.
  • · If verification shows the family is still eligible, follow instructions in Chapter 8.1 (Changes in circumstances).
  • When lump sum income is NOT reported timely, and the income puts the family over the maximum allowed for their family size (85 percent of SMI), cite an overpayment for child care assistance paid in excess of what should have been paid had the payment been reported timely. The overpayment would include the time period between the date of receipt of the lump sum and the end of the 15-day adverse action notice. Consider if all or part of the lump sum would have been disregarded as the first $60 in included lump sum income for the calendar quarter before assessing an overpayment.

    If a lump sum received in the previous 12-month eligibility period is not reported at redetermination and would have resulted in a higher copayment, cite an overpayment for child care assistance paid in excess of what should been paid had the payment been reported at redetermination. This may require a copayment increase to prevent an on-going overpayment through the end of the current 12-month eligibility period. If a patch is needed for the copayment to increase, contact your policy specialist.

    NOTE: The Child Care Assistance program does NOT have an asset test. The liquidation of an asset does NOT count as lump sum income when determining a household’s income. However, during CCAP participation, any interest/dividend received as a result of investments must be included in the household’s income. See Chapter 6.6 (Earned/Unearned Income).

    Tracking the lump sum

    MEC2 does not remove the lump sum from income in eligibility when the annualization period ends. See the MEC2 User Manual for instructions on how to track the expiration of the lump sum income and steps to follow when it expires.

    Legal authority

    Minnesota Statutes 119B.011
    Minnesota Statutes 119B.02
    Minnesota Rules 3400.0170
    Minnesota Rules 3400.0180
    Minnesota Rules 3400.0185

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