COVID-19 Stimulus Checks And Their Impact On Medicaid Eligibility

| Feb 1, 2021 | Firm News |

Overview

The Coronavirus Response and Relief Supplemental Appropriations Act of 2021 (passed on December 27, 2020) is intended to help offset the huge financial crisis caused by the Coronavirus (COVID-19) pandemic.  As part of this act, a second round of COVID-19 stimulus checks were approved for most Americans, including those who are elderly and on fixed income. On December 29, 2020, the issuance of these payments began by the Internal Revenue Service (IRS) and the U.S. Treasury Department. Even as the second stimulus payments go out, there is a push for a third stimulus check.

Many Medicaid beneficiaries who live at home, assisted living, adult foster care, or nursing homes are concerned the money will put them over the Medicaid income or asset limit, and therefore, disqualify them from Medicaid benefits. Medicaid applicants express the same concern that the additional money will cause them to have income or assets over Medicaid’s limits, and as a result, prevent them from becoming eligible for Medicaid.

Stimulus checks do not count as income, and therefore do not impact Medicaid beneficiaries or applicants. However, should the stimulus money not be spent within 12 months, it will be counted as an asset, and therefore could impact eligibility in the year ahead.

Stimulus Check Impact for Medicaid Beneficiaries

Nursing Home Residents

The receipt of stimulus checks by Medicaid beneficiaries who reside in nursing homes do not impact these individuals’ Medicaid benefits. In other words, stimulus checks do not disqualify them from Medicaid benefits. This is because Medicaid does not count the money as income, which means it cannot push one over Medicaid’s income limit, and hence, result in the loss of Medicaid benefits.  Furthermore, stimulus checks do not count as assets, provided that the money is spent within 12-months of receiving it. Therefore, a nursing home Medicaid recipient can retain possession of the stimulus money and it will not impact that beneficiary’s Medicaid eligibility. However, it is essential that the stimulus money be completely spent within one year of receipt. If it is not spent down, the remaining amount will count towards Medicaid’s asset limit and could potentially push the beneficiary over the resource limit, resulting in Medicaid disqualification.

Neither Medicaid, nor a nursing home in which a Medicaid beneficiary resides, can take stimulus check money to help cover the cost of their care.

Spouses of Nursing Home Residents

Non-applicant spouses of Medicaid-funded nursing home residents (called Community Spouses) can receive stimulus checks without impacting their spouses’ Medicaid eligibility in any manner. First, and foremost, the money from stimulus checks is not considered income by Medicaid, and even if it were, the income of a non-applicant spouse is not considered in the continuing Medicaid eligibility of the institutionalized spouse.

For Medicaid beneficiaries, the entire check needs to be spent within 12-months of receiving it or the remaining funds will count as assets towards Medicaid’s eligibility. However, the same rule does not hold true for community spouses.  There is no time limit in which a community spouse must spend his/her stimulus checks.  The funds from a non-applicant spouse’s stimulus check will never count as resource towards the institutionalized spouse’s eligibility.

Medicaid Waiver Beneficiaries

Home and Community Based Services (HCBS) Medicaid Waiver recipients can receive stimulus checks and it will not impact their Medicaid eligibility if spent within 12-months of receipt.  This is because the money from the checks is never considered as income, but it will be counted towards Medicaid’s resource limit if not spent within the specified 12-month period.

Aged, Blind and Disabled Beneficiaries

Persons who are on Aged, Blind and Disabled (ABD) Medicaid are no exception from other Medicaid recipients and will be issued a second stimulus check.  The receipt of this money will in no way impact an ABD beneficiary’s Medicaid benefits, meaning the receipt of this check will not cause one to lose his/her Medicaid benefits.  The money is also not considered as income for Medicaid purposes, nor will it be treated as a resource for the first 12-months.  However, if the money is not spent down in its entirety during that timeframe, any remaining funds will be counted as a resource by Medicaid and could cause one to lose his/her Medicaid eligibility.

Stimulus Check Impact for Medicaid Applicants

When it comes to applying for Medicaid, stimulus checks are not considered towards Medicaid’s income or asset limit (if spent within 12 months of receiving it) in any of the 50 states and Washington DC. This means that the receipt of these cash payments will not cause an applicant to be over the income and/or resource limit(s), and hence, be denied Medicaid benefits.  This is true regardless of what Medicaid program (ABD Medicaid, nursing home Medicaid, HCBS Medicaid Waiver) an applicant is applying for and regardless of marital status.

Medicaid has a 60-month look back period (Medi-Cal in California is 30-months) in which Medicaid considers all past asset transfers immediately preceding one’s Medicaid application. During this timeframe, the Medicaid agency scrutinizes all past asset transfers to ensure no assets were given away or sold under fair market value. If one violates this rule, it is assumed it was done to meet Medicaid’s asset limit and a penalty period of Medicaid ineligibility is established. However, it is thought that the stimulus money is exempt from this rule, given the money is gifted within 12-months of receiving it. Therefore, a Medicaid applicant, or someone considering applying for Medicaid, could give away the stimulus check money to family members, educational funds, to charity, etc. during the 12-month period. However, after 12-months, the funds would count as assets for Medicaid eligibility purposes and giving the money away would violate Medicaid’s look back rule.