What Happens To My Benefits If I Get a Bunch of Money?

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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
  • Inheritances
  • Divorce settlements
  • Money you get when you sell a house, land or other things
  • Unemployment
  • Gifts
  • Lottery Winnings
  • Income Tax Refunds



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.

DHHS must first approve the account.  The money may only be withdrawn from the account to pay for certain expenses, such as:

  • Education or job training
  • Purchase or repair of the family’s home
  • Purchase or repair of a vehicle used for work or education or training
  • Starting a small business
  • Money used within the first 30 days to pay health care costs for a member of your household
  • Money used within the first 30 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 within the first 30 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 money.

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 the penalty:

  • funeral expenses
  • travel costs related to illness
  • repair of a vehicle;
  • payment of day to day living costs
  • medical needs
  • clothing 
  • housing needs, including payment to prevent an eviction or foreclosure
  • payment of utility bills to prevent a disconnection.

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.

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 can not 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 limit of $2000, re- apply for TANF the month after you get below the $2000 liquid asset limit.  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. 



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.

Important:  There are no asset limits for: parents, children under age 21, or pregnant women.  Asset limits only apply to people over age 65 or who people who are disabled.

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
  • clothing
  • up to $10,000  put into a DHHS approved  Family Development Account.  (This is only for families with minor children.)  The money in the account may only be used for certain limited purposes.t
  • $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.


Food Supplement

Lump-sum payments do not count as income. There are also no asset limits for the Food Supplement program.  Therefore, money that you get as a lump-sum will not be used when seeing if you can get Food Supplement benefits.  You should still report to DHHS that you have received a lump sum.



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.

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 is 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.