TN 34 (08-99)

Citations:

20 CFR 416.1121(e) and (g); 416.1201(a)

A. Introduction

Death benefits, including gifts and inheritances an individual will use to pay the deceased's last illness and burial expenses, may still be on hand the first moment of the month following the month of receipt. It is reasonable to assume, for a limited time, that death benefits will be used for last illness and burial expenses and are not available for support and maintenance.

B. Policy

1. When a Death Benefit is Not a Resource

Effective August 1991, death benefits, including gifts and inheritances, that are not income under SI 00830.545, also are not a resource for one calendar month following the month of receipt. If retained until the first moment of the second calendar month following receipt, death benefits are resources.

2. Exception — Bills Already Paid

Death benefits that are repayment of bills for last illness and burial expenses the individual has already paid are subject to resources rules beginning with the first moment of the month following the month of receipt.

C. Procedure

1. Development Not Required

Do not develop unless the amount retained plus other countable resources exceeds the applicable resources limit.

2. Development Required

If an individual would have excess resources, determine and document whether death benefits:

• were income under SI 00830.545; and

• if not income, whether the amounts were for repayment of bills already paid.

If you determine that death benefits should not be counted for one calendar month, document the amounts and the month.

D. References

• Death benefits as income, SI 00830.545

• First-of-the-month (FOM) rule, SI 01110.600

• Commingled funds, SI 01130.700

E. Example — death benefits not a resource

1. Situation

As a result of her uncle's death, Barbara Smith, a disabled SSI recipient, receives $4,000 in July as beneficiary of his life insurance policy. She intends to spend the entire amount on his last illness and burial expenses. She has already received bills totaling $900 which she pays. On August 1, she receives a funeral bill for $2,900 and a few days later receives a cash gift of $500 to be used for last illness and burial expenses. She pays the $2,900 funeral bill in August and intends to use the remainder to pay some hospital expenses.

2. Analysis

Neither the $4,000 Ms. Smith receives in July nor the $500 she receives in August is unearned income. Since she uses $900 of the $4,000 life insurance check in July, as of August 1, she has a $3,100 balance which is not a resource for August. During August she pays the $2,900 bill and then has $200 left. However, the $500 she receives in August gives her $700 to use for hospital expenses. She must spend $200 in August for burial or last illness expenses, otherwise the $200 will count as a resource September 1. She has until the end of September to spend the remaining $500, otherwise it will be a resource October 1.

F. Example — death benefits a resource

1. Situation

Ruth Taylor, a 68-year-old SSI recipient, has total countable resources of $1,980 consisting of a $1,000 savings account and $980 checking account. Her brother died in late October. In November she receives $3,000 as beneficiary of her brother's life insurance policy. She has last illness and burial expenses of $2,750 to pay. There will be no more bills after these.

2. Analysis

Of the $3,000 Ms. Taylor received, $250 is unearned income in November because last illness and burial expenses are only $2,750. The $2,750 is not unearned income and will not be a resource until January 1 if she still has it then. The $250 amount will be a resource on December 1 and, when added to the money she has in her checking and savings accounts, will cause her to be ineligible if the total is more than $2,000.