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1-20 (VI) Insurance Settlement - Money received by a person(s) from a company for damage of property or person for trauma is income. Any cash received from medical or liability insurers for medical services already received by the individual is not income. However, any amount received which exceeds the actual cost of the medical expenses shall be counted as unearned income. (VII) Lump sum. (1.) The total amount less legal fees required to make the money available and less the amount designated by the payer or source for medical expenses shall be considered. (2.) A lump sum (one-time payment) may cause a recipient to become ineligible or eligible for reduced benefits if the amount cannot be excluded using the infrequent and irregular policy. (3.) The period of ineligibility or reduction, when appropriate, begins the month following the month the lump sum is received. (4.) The period of ineligibility shall be determined by dividing the lump sum amount by the maximum income limit on Appendix A plus one dollar ($1.00) for the assistance unit size. (5.) The result is the number of months the assistance unit shall be ineligible for child care assistance. Any fractions shall be rounded up. (6.) A shortened period of ineligibility shall be allowed in the specified situations and under the specified conditions: a. One (1) of these situations shall exist: 1. The assistance unit incurs and pays medical expenses not covered by health insurance or a third party; 2. A disaster beyond the control of the assistance unit which causes the lump sum to become unavailable to the assistance unit; or 3. The lump sum was received from an insurance policy payable because of a loss or reimbursement for the actual cost of replacement. It does not include payment received for "pain and suffering"; or 4. The lump sum payment was issued in error and written verification from the payer is received indicating the client is required to return the lump sum money; and