Government Benefits for Low Income Families

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?

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?

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.

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 $910.75 (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?