Stimulus Check, SSI and Medicaid

The Coronavirus Aid, Relief and Economic Security Act, also known as the CARES Act, was enacted on March 27, 2020 as Public Law 116-136.  It is a $2 trillion economic stimulus bill.  The goal of this legislation is to provide relief to individuals and businesses that have been impacted by the coronavirus crisis.

Many individuals will receive $1,200 as an economic stimulus payment.  The payment of $1,200 should not affect Medicaid eligibility as long as the funds are spent down within 12 months.

According to applicable federal law, the New Jersey Medicaid program is not allowed to have more restrictive income and resource requirements than Supplemental Security Income, also known as SSI.  If an individual qualifies for SSI based upon income and assets, then he or she will also be eligible for Medicaid in the State of New Jersey.

Social Security will not consider the economic impact payments of $1,200 as income for SSI beneficiaries.  In addition, the payment of $1,200 is excluded from resources for 12 months.  Based upon federal law, Medicaid must also treat the payment of $1,200 in the same manner as SSI.

The payment of $1,200 will not be considered by Medicaid to be income.  In addition, the $1,200 received from the government will not be considered a resource as long as the funds are spent down within 12 months. 

Medicaid Does Not Allow Gifts of $15,000 Per Year

If a person provides gifts within five years of the Medicaid application, then the County Board of Social Services will presume that those gifts were provided for Medicaid planning.  The individual who provides gifts within five years of the application will be denied Medicaid for a period of time known as the penalty period.  The duration of the penalty period is based upon the value of the gifts provided by that individual.

Many people mistakenly believe that they can gift up to $15,000 per year and that this will not have an effect on Medicaid eligibility.  This is absolutely false.  Medicaid does not allow a person to gift up to $15,000 per year without jeopardizing eligibility for assistance. 

The IRS allows a person to gift up to $15,000 per person each year without having to file a gift tax return, known as Form 709.  If a person were to gift more than $15,000 in one year to a person, then the individual who provided the gift would have to file a gift tax return.

Medicaid does not recognize or follow the rules set forth in our tax code.  There is no exemption for a gift of $15,000 or less in the context of Medicaid eligibility.  Although a gift tax return does not have to be filed for that gift, it will have an impact on that individual’s ability to acquire Medicaid to pay for long-term care.  

Change in Medicaid Laws: Minimum Amount Increases for Healthier Spouse

When a healthier spouse requires long-term care in a nursing home facility, then that care can quickly deplete the family’s life savings.  Fortunately, there are federal and state laws that prevent the healthier spouse from being impoverished.

When a spouse requires long-term care in a nursing home facility, then the healthier spouse can keep the house, car, personal effects and a portion of the remaining assets.  The portion of the remaining assets that the healthier spouse can keep is known as the Community Spousal Resource Allowance, or CSRA.

In many cases, the healthier spouse can keep one-half of the cash assets as his or her CSRA.  These are assets that the healthier spouse can keep and not use for the other spouse’s long-term care needs in a nursing home.  Federal law sets forth a minimum amount that the healthier spouse can keep.  Last year the minimum amount that the healthier spouse can keep was $25,284.00. 

Effective January 2020, the minimum amount that a healthier spouse can keep as his or her CSRA is $25,728.00.  By way of illustration, assume that the husband and wife own a house, automobile and cash assets of $40,000.00.  The healthier spouse can keep the house, automobile and $25,728.00 of the cash assets.  The balance of the cash assets of $14,272.00 will have to be spent down in order to qualify the institutionalized spouse for Medicaid assistance.