What Happens When Person Onhpublic Assistance Awarded Money From Lawsuit

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WELFARE;

OLR Research Report


November 30, 2009		2009-R-0412
RECOVERIES FROM FORMER PUBLIC ASSISTANCE RECIPIENTS

By: Robin K. Cohen, Principal Analyst

You asked if the state can recover from current or former public assistance recipients when their financial status changes (e.g., inheritance). If so, you would like to see a breakdown by town of these recoveries.

We contacted the Department of Administrative Services (DAS) and the Department of Social Services (DSS). The former collects the recoveries based on referrals from DSS. Neither is able to provide town-by-town breakdowns, but DAS indicated that it will be working to do so in the future.

SUMMARY

The state attempts to recover from current and former public assistance recipients who experience a financial windfall from things like lawsuit settlements, as well as from the estates of these individuals when they die. The state generally takes half of the windfall proceeds and the recipient keeps the other half. (If the beneficiary is still receiving public assistance, any windfall may affect his or her ongoing eligibility for assistance.) The state ' s share of estate recoveries is the entire amount of assistance provided. In FY 09, DAS recovered over $36 million from current and former DSS program beneficiaries.

RECOVERIES OF PUBLIC ASSISTANCE

Windfalls

The law gives the state a claim that has priority over all other unsecured claims when a beneficiary of aid under the State Supplement, Medicaid, Aid to Families with Dependent Children (AFDC, replaced by Temporary Family Assistance (TFA)) provided to anyone over age 18, or State-Administered General Assistance (SAGA) programs acquires property of any kind or interest in such property. This includes windfalls such as lottery winnings, proceeds from a lawsuit, and inheritances.

The state ' s claim is a lien against the amount of the windfall from a lawsuit or inheritance that generally equals the lesser of the amount of assistance paid or 50% of the windfall proceeds; for any other windfall, such as a lottery win, the state ' s claim is for the lesser of 100% of the proceeds or the amount of assistance provided.

The state ' s claim on lawsuit proceeds has priority over all other claims except (1) attorney ' s fees and expenses related to the suit, (2) hospitalization costs connected to the suit, and (3) court-ordered child support (CGS �� 17-93, 94).

Estate Recoveries

The state also has a claim against the estates of former public assistance recipients when they die (CGS � 17b-95). When (1) a parent of a child who has at any time been a TFA, SAGA, or AFDC recipient or (2) the person him or herself was the beneficiary of these programs, Medicaid, or State Supplement dies, the state ' s claim is for the entire amount of assistance provided, to the extent that (1) the state has not been reimbursed for it and (2) a surviving spouse, parent, or dependent child of the deceased does not need the estate proceeds for support. These recoveries would include those from the estates of individuals for whom Medicaid paid for nursing home care.

The state ' s claim has priority except for expenses of (1) last sickness up to $375; (2) funeral and burial; and (3) estate administration, including probate fees and taxes and fiduciary fees based on the estate ' s value.

In addition to other assets, the state recovers from annuities. Any sums due to a former public assistance recipient after his or her death from an annuity purchased for him or her at any time with the recipient ' s assets are considered to be part of the estate, and the person receiving the annuity payment must pay the state the amount necessary to fully reimburse it for assistance provided to the deceased (CGS � 17b-95).

In 2003, the legislature required recoveries from ConnPACE recipients ' estates. It repealed the requirement in 2004.

Order of Distribution—Medicaid and Child Support

When a recipient experiences a windfall and is subject to a court-ordered current or arrearage child support payment obligation in a IV-D support case, the state ' s share of the funds must be paid first to the state to reimburse it for Medicaid if the windfall is from a lawsuit and involved injuries for which Medicaid provided coverage. After that, funds are paid to the Bureau of Child Support Enforcement for distribution as required by federal law. The remainder, if any, is paid to the state for any other public assistance provided (CGS � 17b-93(d)).

Exemptions

The law prohibits any claims or liens against payments made under several state laws, including:

1. housing relocation assistance;

2. condominium relocation conversion payments and reimbursements for moving and other expenses for low-income individuals;

3. settlements or awards in housing, employment, or public accommodation discrimination cases;

4. court-ordered retroactive rent abatements; and

5. any security deposit refund (CGS � 17b-93(c)).

DAS Role

DAS ' s Business Collections Recovery Unit is responsible for recovering assistance provided by DSS programs when recipients receive a windfall or former recipients die.

Lawsuit proceeds are assignable to the state as reimbursement for state aid and once the assignment is presented to the beneficiary ' s attorney it is considered an irrevocable direction to the attorney to pay DAS from the settlement. But if DAS does not inform the attorney of the amount of the lien within 45 days of receiving the attorney ' s request for such, the attorney can distribute all of the proceeds to the beneficiary and is not liable for any loss the state sustains

For inheritances, the probate court must accept assignments that the beneficiary may have executed or any lien notice, if DAS files them with the court before the court distributes the inheritance. The court must order distribution based on receipt of the assignment (CGS � 17b-94).

RECOVERY AMOUNTS

Table 1 provides total recoveries DAS collected in FY 09, by type of recovery (e.g., windfall) and DSS program. Over $36 million was recovered. Lottery proceeds are not included.

Table 1: Recoveries of DSS Assistance (FY 09)

*Case Type*	*Program*	*Amount Recovered*	*% of Recovery (rounded)*
Inheritance
	Aid to Families with Dependent Children (AFDC (pre-10/1/96)	$2,167,791	59%
	TANF cash assistance (Temporary Family Assistance)	182,667	4.9
	Medicaid—non managed care	273,800	7.4
	Medicaid—managed care	965	.03
	SAGA cash assistance	66,552	1.8
	SAGA medical assistance	647,628	17.5
	State Supplement	362,238	9.8
Total		3,700,654

Accident/insurance settlement liens
	AFDC	5,662,880	27.3
	TANF cash	2,535,069	12.2
	Medicaid-non managed	9,430,511	45.5
	Medicaid managed	296,967	1.4
	SAGA cash	395,879	1.9
	SAGA medical	1,920,502	9.2
	State Supplement	498,758	2.4
Total		20,744,711

Table 1: -Continued-

*Case Type*	*Program*	*Amount Recovered*	*% of Recovery (rounded)*
Estate recoveries
	AFDC	1,446,923	12.4
	TANF cash	170,461	1.5
	Medicaid –non managed	9,177,399	78.8
	Medicaid—managed	2,431	.02
	SAGA cash	10,740	.09
	SAGA medical	312,242	2.7
	State Supplement	529,289	4.5
Total		11,649.488
Grand Total		36,094,845