MR #21.12: Treatment of Substantial Lottery or Gambling Winnings for SNAP Eligibility

Illinois Department of Humans Services Logo

04/29/2021

Summary

This manual release provides policy on the treatment of "substantial lottery or gambling winnings" for the Supplemental Nutrition Assistance Program (SNAP).
The receipt of substantial winnings is a separate reporting requirement from a change in income or resources. Section 4009 of the Agricultural Act of 2014 requires all SNAP households with substantial lottery or gambling winnings to immediately lose eligibility for SNAP benefits. This means that categorically eligible SNAP households (PM 05-07-00) whose resources (assets) are exempt under regular SNAP rules are now subject to the substantial lottery or gambling winnings resource limit $3,500, if in receipt of the winnings. This includes SNAP recipients who receive TANF and SSI income and would normally have their resources exempt (PM 07-04-01-c).
Substantial lottery or gambling winnings are defined as a cash prize won in a single game, before taxes or other amounts are withheld, which is equal to or greater than the resource limit of $3,500.
If multiple individuals share in the purchase of a ticket, hand, or similar bet, then only the portion of the winnings allocated to the winning member(s) in the household is counted toward the eligibility determination.
Lottery and gambling winnings of $3,500 or more must be reported at the redetermination (REDE) and Mid-Point Report (MPR). A Change Reporting household must report the income or winnings within 10 calendar days of the date of receipt and for Mid-Point Reporting households, by the 10th calendar day of the month after the month that the income or winnings were received during the certification period. A Mid-Point Reporting household cannot wait until the Mid-Point Report or REDE to report the receipt of substantial lottery or gambling winnings.
At the REDE, the application is denied. Benefits are canceled for the first month that can be affected if reported at the Mid-Point Report or during the certification period. The household must receive a 10-calendar day timely notice.
The requirement to report lottery or gambling winnings is added to the rights and responsibilities section of Notice of Decision (Form 360c) and to Change in Reporting Requirements (Form 3324). Form 360c also includes the denial/cancelation reason.
Verification Checklist (Form 267 VCL) is revised to request proof of the gross amount of lottery or gambling winnings before taxes and the date received and provides examples of the acceptable verification types.
Cash, Medical, SNAP Redetermination Application (Form 1893) and TANF and SNAP Mid-Point Report (Form 2890) are revised to include questions about substantial lottery gambling winnings. A client notice about this change will not be mailed to households.
ABE and IES have been modified to include questions about lottery/gambling winnings. System changes are effective 04/21/21.
This policy change applies to redeterminations (REDEs) and Mid-Point Reports received on or after 04/21/21 and changes reported during the certification period on or after this date.
For REDEs and Mid-Point Reports that have been received prior to 04/21/21, the HSC will need to answer "No" to the lottery or gambling questions. Currently Mid-Point Reports are waived through June 2021. The lottery or gambling questions will be included on Form 1893 that is mailing at the end of April 2021.
A separate manual release will be provided on lottery or gambling winnings for medical programs.

Substantial Lottery or Gambling Winnings Overview

Federal legislation was passed that requires a resource (asset) limit of $3,500 be applied to "substantial lottery or gambling winnings" for Supplemental Nutrition Assistance Program (SNAP) recipients. Section 4009 of the Agricultural Act of 2014 requires all SNAP households with substantial lottery or gambling winnings to immediately lose eligibility, regardless of whether the winnings have been spent or reduced below the limit. Categorically eligible SNAP households (PM 05-07-00) whose resources (assets) are normally exempt under regular SNAP rules are now subject to the substantial lottery or gambling winnings resource limit. This includes SNAP recipients who receive TANF and SSI income and would normally have their resources exempt PM 07-04-01-c . The SNAP case is closed based on the receipt of the winnings.
This policy change applies to redeterminations (REDEs) and Mid-Point Reports received on and after 04/21/21 and changes reported during the certification period on and after this date.
For REDEs and Mid-Point Reports that have been received prior to 04/21/21, the HSC will need to answer "No" to the lottery and gambling questions. Currently Mid-Point Reports are waived through June 2021. The lottery or gambling questions will be included on Form 1893 that will be mailed the end of April 2021.
A separate manual release will be provided on lottery or gambling winnings for medical programs.

What is a Substantial Lottery/Gambling Winning?

"Substantial lottery or gambling winnings" is when a member of the household wins a cash prize in a single game, before taxes or other amounts are withheld, that is equal to or greater than the lottery or gambling resource limit $3,500.

When to Count as a Resource

Substantial Lottery or Gambling Winnings received prior to an initial application does not affect eligibility. Only consider winnings won during the certification period or won at the time of the Redetermination or Mid-Point Report.
Count the gross amount (before taxes or any other deductions) won in a single game when the amount is $3,500 or more. When multiple persons share in the purchase of a ticket, hand, or bet, count only the portion of the winnings allocated to a household member.

Example: Mr. J won $2000 off of a scratch off ticket and then won $2000 off of another ticket. Mr. J's total winnings is $4000. However, the winnings would not be considered as a substantial lottery or gambling winning of $3,500 because it is two separate winnings.

Note: Lottery or gambling winnings received in monthly payments or on a recurring bases are budgeted as income and not as a resource.

How to Verify

The household must verify the "substantial winnings" and any amount that has been spent.
IES will pend if the question to lottery or gambling winnings is answered "Yes" and sends Verification Checklist (Form 267 VCL) to request verification. A statement from the lottery commission or gaming facility may be used to establish the winnings amount and bank statements to track the amount spent. Verification may include but is not limited to:
- Illinois Lottery Claim Form;
- Another State's Lottery Claim Form;
- Certain Gambling Winnings (Form W 2-G);
- Letter from the lottery commission or gaming entity;
- Income Tax record;
- Any document that identifies the source of the payment, winner(s) name, address, date of the winnings, the gross amount before taxes.

When Should Substantial Winnings be Reported?

The receipt of substantial winnings is a separate reporting requirement from a change in income or resources and requires households with substantial lottery or gambling winnings to immediately lose eligibility for SNAP benefits
All SNAP households are required to report when they receive a single substantial lottery or gambling winning of $3,500 or more:
- at REDE;
- Mid-Point Report; and
- for Change Reporting households, within 10 calendar days of the date of receipt during the certification period; or
- for Mid-Point Reporting households, by the 10th calendar day of the month after the month that the income or winnings were received during the certification period. A Mid-Point Reporting household cannot wait until the Mid-Point Report or REDE to report the receipt of substantial lottery or gambling winnings.
The rights and responsibility page in Notice of Decision Form 360c and the Change in Reporting Requirements (Form 3324) informs SNAP households with the reporting requirement for substantial lottery or gambling winnings
At the REDE, the application is denied.
Benefits are canceled for the first month that can be affected if reported at the Mid-Point Report or during the certification period. The household must receive a 10-calendar day timely notice.
Form 360c is sent with the denial/cancellation reason: Your household has received Lottery / Gambling winnings exceeding the maximum asset amount allowed by the agency.

When to Act on Information about Substantial Winnings

Reported by the Household

When the household reports that it received substantial winnings, the FCRC should take prompt action to verify the information and begin case closure procedures. When a household member receives a substantial lottery/gambling winning during the certification period, cancel the SNAP benefit using the reason Your household has received Lottery/Gambling winnings exceeding the maximum asset amount allowed by the agency" PM 07-04-21. Allow the household a 10-calendar day timely notice.
Enter a detailed summary of the case circumstances and the cancellation in Case Comments.

Example: Ms. Z reports to the FCRC that she won $10,000 from the State lottery. Upon receipt of this information, the FCRC must then act on this information by requesting verification, determining eligibility, and closing the case based on the receipt of the winnings.

Reported on a Data Crossmatch

If not reported by the household, consider as unclear information and follow-up with the SNAP household to confirm the accuracy of the match, request verification and take the appropriate action on the SNAP case.
Enter a detailed summary of the case circumstances and the cancellation in Case Comments

Substantial Winnings Spent Below the Limit

A SNAP recipient who spends all of the winnings or reduces the amount below the resource limit is still required to report the winnings within 10 calendar days of receipt. Verification is requested and eligibility determined based on the winnings. The SNAP case is still closed based on the receipt of the winnings.
The household may re-apply at any time for SNAP benefits. The next time the household reapplies, it would need to be determined eligible and certified under regular SNAP rules. The household is not considered categorically eligible.

Example: Ms. B wins $5,000 from a scratch-off lottery ticket. Ms. B spends $1,700 after 7 days and now has $3,300 remaining from her scratch-off winnings. Ms. B must report her total winnings of $5,000 to the FCRC. The FCRC must then act on this information by closing Ms. B's SNAP case. Ms. B may choose to reapply for SNAP benefits at any time and have her eligibility determined under regular SNAP income and resource limits. She would not be considered categorically eligible at this application and her resources would be compared to the regular SNAP resource limit.

Member Leaves the Household

Substantial lottery of gambling winnings applies only to the household where the member resided when the winnings were won. If the composition of that household changes (a member left), then household would no longer exist as it did when the winnings were won and any remaining members would be considered as a new household, if they chose to apply. The eligibility of the new household is not affected.

Example: Mr. T, his spouse J and children BJ and TJ are one SNAP household. Mr. T wins $5,000 and reports it within 10 calendar days of winning. The FCRC closes the SNAP case for the entire household. TJ subsequently leaves the household and joins his grandmother's household. The household with TJ and his grandmother may apply for and receive SNAP, if determined eligible. Mr. T, his spouse J and child BJ may also apply for and receive SNAP, if determined eligible. The requirement that a previously disqualified household must meet income and resource standards does not apply to the either household since neither household as they currently exist was disqualified for substantial lottery winnings. These households may qualify for SNAP at their next application under categorical eligibility rules, if applicable.

Regaining Eligibility

The SNAP household may reapply at any time and be determined eligible by showing the substantial winnings are below the lottery or gambling winnings resource limit. The next time the household reapplies and is certified for SNAP after losing eligibility under the substantial lottery or gambling resource limit rule, it is not considered categorically eligible.
The SNAP household must meet allowable income and resource tests under regular SNAP rules to qualify for benefits. All assets and income must be verified. This applies to all SNAP households, including categorically eligible households whose assets would normally be exempt. SNAP households whose members receive TANF and/or SSI would not be categorically eligible, and their resource are considered. This applies only to the first time the household is approved following the loss of eligibility for substantial lottery and gambling winnings. This means:
- qualifying member households must have countable resources of $3,500 or less;
- all other households must have countable resources of $2,250 or less;
- the household must have net income equal to or less than the monthly net income limit.

Example: Ms. H won $8,000 from a scratch-off lottery ticket and reported this information to the FCRC on April 1. The FCRC closes Ms. H's SNAP case. On June 1, Ms. H applies for SNAP benefits and must have her eligibility determined under regular SNAP rules. Ms. H must meet the income and resource limits as she is not considered to be categorically eligible at this application. Ms. H is disabled and must meet the net income limit for a qualifying member household of 1, have countable resources of 3,500 or less, and meet all other eligibility requirements in order to be eligible.

Subsequent SNAP Application after Losing Categorical Eligibility

After losing categorical eligibility for a certification period, the household may reapply and be determined categorically eligible.
IES will not count the Lottery/Gambling Lump Sum resource in a subsequent SNAP application,
IES will determine the household categorically when there are different EDG members, or the household is approved again after the first certification.

Rights and Responsibilities and Form Revisions

Initial Application

Lottery or gambling winnings received prior to initial application are not considered.
As a part of the explanation of the household's rights and responsibilities, inform the households at initial certification of the immediate loss of eligibility for SNAP if a member receives substantial lottery and gambling winnings and the reporting requirement.

Redetermination

Inform active SNAP households of their new reporting requirement as a part of the explanation of the household's rights and responsibilities during their certification interview.
For households whose next recertification does not require an interview or because their interview requirement has been waived, the Notice of Decision (Form 360c) includes the lottery and gambling reporting requirement as part of the rights and responsibilities and will serve as notification to the client.
TANF and SNAP Mid-Point Report (Form 2890) and the Cash, Medical, SNAP Redetermination Application (Form 1893) are revised to include questions about substantial lottery or gambling winnings.

NOTICE OF DECISION (FORM 360C)
Someone in your household receives any money from Lottery/Gambling winnings You must report the changes below by the 10th day of the month after the month that the income or winnings were received: If your gross income before deductions is more than (SNAP gross monthly income standard for the household size). If you or someone in your household receives any money from Lottery or Gambling winnings of (qualifying member asset standard for SNAP); or more.	Alguien en su hogar recibe dinero de las ganancias de la Lotería / n de Apuestas. Usted debe reporter los cambios por debajo antes del día 10 del mes siguiente al mes en que los ingresos o ganancias SE RECIBIERON: SI SUS INGRESOS BRUTOS ANTES DE DEDUCCIONES, son MÁS DE <$ SNAP gross monthly income standard for the household size>. SI USTED O ALGUIEN EN SU HOGAR RECIBEN CUALQUIER DINERO DE LOTERÍAS O GANANCIAS de APUESTAS DE <$ qualifying member asset standard for SNAP> O MÁS.
Your household has received Lottery / Gambling winnings exceeding the maximum asset amount allowed by the agency.	Su hogar ha recibido ganancias de lotería / juegos de azar que exceden el máximo permitido por la agencia.
CHANGE IN REPORTING REQUIREMENTS (FORM 3324)
if someone in your household receives any money from Lottery/ Gambling winnings.	Si alguien en su hogar recibe ningún dinero de la Lotería / apuestas
VERIFICAITON CHECKLIST (FORM 267 VCL)
Proof of the gross amount of lottery or gambling winnings before taxes and the date received	Prueba de la cantidad bruta de lotería, juegos de azar o el premio ganancias y la fecha de recepción

ABE/IES System Changes

System changes are effective 04/21/21.

Specific questions pertaining to lottery/gambling winnings are added to:
- ABE in the Mid-Point Reporting, Report My Change and Renew My Benefits flows.
- IES Lump Sum asset screens and gatepost questions, and
  - The Mid-Point Reporting received screen.
Rules are added to eligibility to:
- Close the SNAP EDG when the household receives lottery or gambling winnings equal to or more than the asset limit,
- Identify the EDG as not categorically eligible the next time the household applied for SNAP and is approved,
- Pend the EDG when the Lottery/Gambling questions are not answered, or verification is not met,
- Not count the Lottery/Gambling Lump Sum asset in a subsequent SNAP application,
- Determine the household categorically when there are different EDG members, or the household is approved again after the first certification.

ABE Changes
Report My Change Gatepost	Has anyone in your household received any money from Lottery/Gambling Winnings?
More about page	More about (name)'s Lottery or Gambling Winnings You told us (name) has received money from Lottery/Gambling Winnings. Please tell us a little bit more about this.
More about page	What is the gross value (before taxes/deductions) of (name)'s lottery/gambling winnings? What is the net value (after taxes/deductions) of (name)'s lottery/gambling winnings? Date of the winnings? Is the payment one-time or ongoing? If ongoing how often? Are the winnings jointly owned? If so, with whom? If Other Joint owner's gross amount of the winnings?
Mid-Point Report (MPR)	Has anyone in your household received any money from Lottery/Gambling Winnings? Please upload proof of the gross amount of lottery/gambling winnings before taxes.
Renew My Benefits Gatepost	Has anyone in your household received any money from Lottery/ Gambling Winnings?
More about page	More about (name)'s Lottery or Gambling Winnings You told us (name)'s has received money from Lottery/Gambling Winnings. Please tell us a little bit more about this.
More about page	What is the gross value (before taxes/deductions) of (name)'s lottery/gambling winnings? What is the net value (after taxes/deductions) of (name)'s lottery/gambling winnings? Date of the winnings? Is the payment one-time or ongoing? If ongoing how often? Are the winnings jointly owned? If so, with whom? If Other Joint owner's gross amount of the winnings?

Manual Revisions

[signed copy on file]

Grace B. Hou

Secretary, Illinois Department of Human Services

Forms Referenced:

Form 360C

Form 267 VCL

Form 1893

Form 2890

Form 3324