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Issue Alert - 13-03-04

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Date:

Mar 28, 2013

Program Area:

Food Assistance Program (FAP), Family Independence Program (FIP), State Disability Assistance (SDA), Medicaid (MA), and Adult Medical Program (AMP)

Issue Summary:

Data on lottery winnings will be provided to DHS and matched to open cases, including cases with applications recently pending.

Persons Affected:

All recipients of and applicants for programs noted above with lottery winnings large enough to require identifying information for payout.

For More Information:

Center for Civil Justice 320 S. Washington, 2nd Floor Saginaw, MI 48607 (989) 755-3120, (800)724-7441 Fax: (989) 755-3558 E-mail: info@ccj-mi.org Michigan Poverty Law Program 611 Church Street, Suite 4A Ann Arbor, MI 48104-3000 (734) 998-6100 (734) 998-9125 Fax


Background

Although the effect of lottery winnings on eligibility and level of public benefits has been the topic of discussion for years, it gained much attention from the media, DHS, the Governor and legislators in 2011 and 2012 with news reports of food assistance recipients who won large prizes and continued to receive food benefits.  One DHS response was to implement a food assistance asset limit effective October 2011.  Because other DHS programs, such as FIP and MA, have always had asset limits, DHS also stepped up efforts to match data from the Lottery Bureau and many other information sources to lists of recipients. 

 

In addition, the legislature passed a statute in April 2012 requiring the Lottery Bureau to notify DHS within 7 days of any prize of $1,000 or more including name, other identifying information and the amount of the prize. 

 

Although Lottery/DHS data matches have been occurring since before the Fall of 2011, it has not been clear just how the information was used or how the policy and statute were being implemented.  

What's Happening?

DHS issued a lottery match policy, BAM 809, effective February 1, 2013.  It is only 2 pages, but can be confusing.  It is available online at http://www.mfia.state.mi.us/olmweb/ex/bam/809.pdf.  In addition, DHS issued a Field Operations Administration memo (FOA-2013-04) on February 20, 2013, to its local offices, which provides more detail on how the information is to be stored in Bridges and explains guidance that USDA/FNS provided to DHS concerning food assistance benefits. 

 

Neither BAM 809 nor the DHS FOA memo say what prize amount will trigger a data match.  Lottery winners are expected to report and pay taxes on all winnings, but the Lottery Bureau only collects winner name and other identifying information on prizes of $601 and above. See How to Claim Your Prize at http://www.michigan.gov/lottery/0,4603,7-110-29196_32094---,00.htmls.  Thus, recipients and applicants should expect that any lottery winnings of $601 or more for which they must provide name and other identifying information like address and social security number will be included in any Lottery Bureau/DHS data matches.  However, while the Lottery Bureau will not have data on prizes smaller than $601, BAM 105 p. 7, states that for most benefits, clients generally are responsible for reporting changes in assets, and unearned income, within 10 days.  The exception is food assistance simplified reporting.

 

BAM 809 states that DHS receives weekly reports from the Lottery Bureau that list the previous week’s winners and a separate monthly match for the purpose of catching newly opened cases where the application had been pending during the month.  The policy is unclear but apparently the weekly reports show winners who match DHS’s list of recipients.

 

While BAM 809 directs the caseworker who believes the match may not be accurate, such as discrepancy in information about the winner, to contact the client, it does not give guidance beyond that.  This will result in widely varying approaches by caseworkers.

 

BAM 809 directs the following steps, most of which are programmed in Bridges:

 

For all programs, if the person wins over $1 million and the person chooses to receive the winnings as an annuity, the annuity payments are treated as unearned income.  All other winnings are treated as a “lump sum”, as described below and which is different for Medicaid than for other programs.

 

For Family Independence Program (FIP), State Disability Assistance (SDA), Adult Medical Program (AMP), the winnings are considered an asset in all months the client has them.

·         If winnings are $3,000 or less (the cash asset limit for these programs), a VCL (verification check list letter) is sent to client to determine if the asset limit has been exceeded. 

·         If winnings are over $3,000, the case is automatically closed. 

 

For Medicaid (MA), the winnings are treated as unearned income in the month received and, if still available to client, as assets in subsequent months.  See BEM 400 (Assets) and BEM 500 (Income)

·         There are many different asset limits for various MA eligibility categories (including, for some categories, no asset limit).  Therefore, BAM 809 refers to BEM 400 which lists those asset limits.  Relevant sections can be found beginning at page 4 of BEM 400.  http://www.mfia.state.mi.us/olmweb/ex/bem/400.pdf

 

For Food Assistance Program (FAP), the winnings are treated as an asset in all months.  (The detail below is a result of DHS’s consultation with USDA/FNS.)  DHS’s response to a “match” depends on the amount of the winnings and whether the winner is a “simplified reporter” and does not receive benefits under other programs.  Most people who have earned income are simplified reporters (see BAM 200) but they may be receiving assistance under other programs.  People who are not simplified reporters are called “change reporters” because they must report most changes that occur, as explained in BAM 105.

 

·         For FAP change reporters or simplified reporters with other active programs

o   If winnings are $5,000 or less, a VCL is sent to client to determine if the FAP asset limit has been exceeded. 

o   If winnings are more than $5,000, the case is closed but the client must receive timely notice as required by federal SNAP regulations.

 

·         For FAP simplified reporters without other active programs

o   If winnings are $5,000 or less, no action is required until the first of the next semi-annual contact or redetermination. 

o   If winnings are over $5,000, the case is closed but the client must receive timely notice as required by federal SNAP regulations.

 

Please note that in any of the cases above where the recipient receives a VCL, they will have a very limited time to comply and provide the verification.  If they fail to comply within the time stated on the VCL, their benefits can and likely will be terminated for failure to provide verification.  Individuals who need more time or help to get verification should give a written request for time or help to their DHS worker, and keep a copy.

 

The FOA memo describes spreadsheets within Bridges on which a summary and then further detail of winnings (implying keeping track of multiple prizes).  

What Should Advocates Do?

1.    Educate clients and community organizations about the new and modified data match policy with respect to lottery winnings.

2.    Be aware that data collected by DHS through matches may not be accurate, up to date or coded correctly in Bridges and that Bridges may be generating termination reports that are in error.  In cases where there appears to be an error, clients should request a hearing and seek legal help.

3.    Provide information to CCJ about families that are being harmed by the lottery data match policy.  Please call CCJ at the number at the top of this form, to find out how to communicate information to CCJ.

Help clients request and present information at administrative hearings when appropriate.

What Should Clients Do?

1.   Contact CCJ’s Helpline at 1-800-481-4989 for help understanding lottery data matching policy and for advocacy with DHS if there appear to be errors in application of the policy. 

2.   Seek legal advice if you are told your benefits are going to be terminated due to the lottery data match policy.   

3.   Read your notices carefully.  If some or all of your benefits are ending, you have the right to request a hearing.  If DHS receives your hearing request within the deadline given in your notice, you will continue to receive benefits at the current level (but if you lose, will owe DHS any assistance you were not entitled to).  Seek legal help if you request a hearing.

Finding Help

Most legal aid and legal services offices handle these types of cases, and they do not charge a fee. You can locate various sources of legal and related services, including the free legal aid office that serves your county, at MichiganLegalAid.org. You can also look in the yellow pages under "attorneys" or call the toll-free lawyer referral number, (800) 968-0738.