Is the Stimulus Payment Counted by Medicaid

Last week I gave you an overview of the CARES Act and specifically how it affects seniors.  A few days later people began to receive their $1200 stimulus payments directly deposited into their bank accounts, the part of the aid package that gives a one time payment to anyone who had $75,000 or less (a lesser amount for those between $75,000 and $99,000) in adjusted gross income in 2019 (or 2018 if you haven’t yet filed your 2019 income tax return).  Since then we have received several calls asking how this payment affects Medicaid.

As we know, Medicaid is a needs based program with strict income and asset limitations.  So we must consider whether this payment is income or an asset?  Assets must remain under $2000 at the end of each month to maintain eligibility for the next month so the concern is whether this payment would make someone ineligible if, when received, their bank account then exceeds $2000.

If the payment is income then it must be included in calculating the amount of income that must be given to the nursing or assisted living facility as part of Medicaid’s cost share provision.  In the case of  home based Medicaid it would need to be turned over to the State of New Jersey.  It might also trigger the need to use a Qualified Income Trust if the income exceeds the income cap of $2349 per month.

The commissioner of the Social Security Administration (SSA) in a blog post has clarified that the SSA does not consider the stimulus payments as income for purposes of Supplemental Security Income (SSI) eligibility.  Rather they are considered an asset but will not be counted for a period of 12 months.  This post is important because Medicaid programs cannot impose eligibility requirements more restrictive than SSI requirements.  This decision is also consistent with what was done back in 2008, the last time the federal government made stimulus payments following the last financial crisis triggered by the collapse of the housing market.

So, what can you and what can’t you do with the payment?  What you can’t do is give it away.  A gift to your children, for example, would be a transfer for less than fair value and cause a Medicaid penalty – a period of ineligibility for benefits.  You also can’t buy jewelry or other tangible items that have financial resale value such as rare coins or stamps.  That’s because what you really have done is converted one asset to another.  You haven’t spent it down. The payment must be spent down so that the Medicaid recipient receives something of fair market value in product or service and it must be spent within 12 months.  Alternatively, the money can be placed in a prepaid funeral trust.  In the case of a married couple, the non-Medicaid spouse can keep his or her own stimulus payment.  The Medicaid spouse’s payment could also possibly be kept and spent by the healthy spouse