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