Could Stimulus Money Wreak Havoc on Medicaid Eligibility, Especially for Nursing Home Residents?

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Reviewed by Kellen Bryant, Esq.

Congress has responded to the COVID-19 crisis by passing a $2 trillion stimulus package known as the CARES Act. The legislation is intended to help individuals and businesses cope with the economic repercussions of safer-at-home orders and other measures taken to stop the spread of the coronavirus. While millions of Americans will soon receive desperately needed government assistance, if they have not already, individual stimulus checks could wreak havoc on Medicaid eligibility, especially for nursing homes residents.

There are, however, precautions adult children can take to protect an elder parent’s Medicaid benefits, which essentially boils down to spending stimulus support quickly and on exempt items. Medicaid has strict asset and income limits that could easily be surpassed with the stimulus funding. One worst case scenario is that nursing home residents would exceed eligibility thresholds, lose their benefits, and have no ability to pay their bills. Nursing homes would also suffer from lost revenue and the awful prospect of evicting delinquent residents, which may not even be feasible.

Medicaid caps countable assets at $2,000 in most states. COVID-19 stimulus checks range from $1,200 for individuals making under $75,000 a year, to $2,400 for married couples making under $150,000 a year. Seniors who rely on Social Security also qualify. Technically, the payments arerefundable tax credits, meaning the Internal Revenue Service will send the check even if it is more than what’s owed in federal income tax.

Spending stimulus funds quickly can help avoid the risk of having the money sit in a bank account for an extended period along with other nominal funds that might add up to more than $2,000. Be aware, however, that Medicaid takes asset transfers seriously to protect against gaming the program, so adult children should help make sure that the assistance is spent on non-countable items. In other words, it should be spent on anything that would help a Medicaid applicant or enrollee rather than increase his or her net worth. For instance, paying forward nursing home expenses is an entirely safe and productive use of the money, or purchasing medical equipment to improve independence, or even buying products and services for personal hygiene to greater improve quality of life.

Correctly managing stimulus payment to avoid Medicaid disqualification is an important consideration that an experienced elder law attorney can help you understand and best navigate through.  We encourage you to use our Find a Lawyer tool and schedule a meeting with an elder law attorney who will be able assist you.