Vol. 4, No. 2, Pg. 34. Public Assistance Clients and Lump Sum Awards.

• Author: By Susan B. Berkowitz and Juanzena L. Johnson

South Carolina Lawyer

1992.

Vol. 4, No. 2, Pg. 34.

Public Assistance Clients and Lump Sum Awards

34Public Assistance Clients and Lump Sum AwardsBy Susan B. Berkowitz and Juanzena L. JohnsonAlthough the settlement of a personal injury action or jury award should compensate for wrongs and make individuals whole, such an award can be the beginning of severe economic hardship for one segment of the population. Public benefits clients have strict resource and income restrictions, and a lawyer must know if the client is receiving benefits with such restrictions to advise the client how a lump sum award could affect the family's benefits.

The lawyer also should structure ways to avoid these problems. Failure to do so might be interpreted as negligence, because the client could end up facing severe economic consequences.The most important time to consider this information is after the award has been determined but before the first check arrives.

This article will concentrate on the effects of lump sum awards on Social Security, food stamp, Aid to Families with Dependent Children and health care programs. Clients who live in public or assisted housing will also be affected.

Social Security and SSI Matters

The Social Security Administration (SSA) is responsible for administering disability and retirement programs designed to assist elderly, blind or disabled persons and their spouses, former spouses, children or widow(er)s. SSA programs include retirement insurance, survivors insurance, disability insurance, hospital and medical insurance (Medicare); black lung benefits, Supplemental Security Income (SST) and Social Security Disability Insurance (SSDI).

A lump sum award received from a personal injury or workers' compensation case may cause the recipient to receive a reduced amount or lose SSA benefits, or to be charged with an overpayment if the award is not handled properly. It is important to realize what resources will affect the benefits. The limit for an individual on Social Security is $2,000.

Resources are important in determining whether a person qualifies for SSA assistance. A resource is cash or other liquid assets and any real property that could be converted to cash.

For SSI purposes, liquid resources can be converted to cash within 20 working days and usually include bank accounts, stocks, bonds, mutual funds and certain types of life insurance policies. Non-liquid resources include real and personal property. Some insurance policies and automobiles may be considered both liquid and non-liquid.

If the resource exceeds the statutory limit of $2,000, the individual cannot receive benefits. However, certain exclusions are allowed and will not influence eligibility. Resources that do not affect...