“Lump Sum Penalties” are harming low-income people, legal service provides aid

Jun 17, 2020

Credit Neighborhood Legal Services of Buffalo

For most New Yorkers unemployment benefits have been blessing, for those who were already collecting other benefits it’s proving to be a curse.

New York State has seen an influx of unemployment claims since the coronavirus pandemic started, with 1.5 million total claims last week according to the Department of Labor. The congestion caused by the high volume of claims has pushed back payment dates for many New Yorkers. This resulted in a lump sum retroactive payment.

While for most people the lump sum is a welcome relief, those who were already receiving separate government aid–such as Temporary Aid–are finding themselves ineligible.

“So if you were to get $8,000, they're going to subtract the $2,000 resource limit and they're going to divide the remaining $6,000 by your $559 monthly grant,” said Diana Proske, a lawyer at Neighborhood Legal Services (NLS). “That's how long you're ineligible for public assistance. So that would be 10.7 months.” 

In this example, Proske explained that there is a certain cap on Temporary Aid benefits, and that receiving a lump sum from unemployment would make recipients ineligible for a period of time that extends well beyond when they can collect their unemployment benefits. This leaves those who were initially collecting Temporary Aid in a situation where they will run out of their unemployment funds before they are eligible again for Temporary Aid.

Neighborhood Legal Services (NLS)–a local legal bureau–is offering those in this predicament resources and legal help to mitigate and ideally avoid these situations.

“In some cases, penalties might be unavoidable, but there are many things that we can do in this situation,” said Penny Selmonsky of NLS’s Health and Economic Security Unit. “We can help people better understand their options and cut through the red tape of eligibility requirements. In addition to saving their benefits, we can save them time and emotional stress, which is important.”

NLS does not have existing cases for this scenario yet, but expects an influx of clients as more people receive their lump sums and lose their Temporary Aid.

“We're just hoping that by getting this [information] out there, we can educate people and hopefully avoid them having the problem,” said Proske.