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| Catherine E. Sears |
Congress
recently passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act,
which is intended to alleviate some of the economic hardship which the outbreak
of COVID-19 has inflicted on the nation. This Act provides many examples of
relief, not only to individuals, but also to businesses and business-owners.
For
many individuals, the most widely-anticipated benefit is the “recovery rebate,”
or a maximum of $1,200.00 for a single taxpayer or $2,400.00 for married
taxpayers who file jointly. This stimulus check is intended to help people
during this difficult economic time, especially those who may have lost their
job. However, as well-intentioned as this recovery rebate is, it could pose a
difficulty to those who, prior to the COVID-19 outbreak, had already been
receiving means-tested government benefits, particularly in the form of
Supplemental Security Income (SSI) and/or Medicaid.
These
means-tested benefits have very stringent rules regarding income and assets.
For example, an unmarried SSI recipient cannot earn more than $783.00 in
countable income each month in order to maintain his SSI benefits. The same
unmarried SSI recipient must also have less than $2,000.00 in countable
resources, or accumulated assets, in order to maintain the monthly benefit.
Therefore, though it may sound wonderful on paper, receiving an unanticipated
$1,200.00 check could have a significant negative impact on this SSI recipient.
Bear in mind as well that most SSI recipients are medically unable to work –
hence, their reliance on this program in the first place. Therefore, the
recovery rebate check would truly be an additional source of income which could
disqualify the recipient from his SSI payments, and not merely be a replacement
for lost wages which had already been factored into the recipient’s income for
SSI qualification purposes.
It is also
important to note that many SSI recipients also rely on Medicaid as their
health insurance, and a disqualification from SSI benefits frequently also
results in a disqualification from Medicaid. Once a former-SSI/Medicaid
recipient no longer has the excess income or has spent-down the excess
resources, she may re-qualify for SSI and Medicaid. However, the re-qualification process involves a copious amount of bureaucratic red tape and
may take several months, during which time the former recipient is likely not
receiving any form of monthly income or health insurance. Additionally, if the
recipient’s caseworker did not notice the excess income/resources in a timely
fashion, the recipient may find herself required to pay back SSI payments which
she had previously received (again, while not currently commanding an income).
There
are some safeguards in place to ensure that the CARES Act’s recovery rebate
does not put the recipients of means-tested government benefits into the
disastrous situation outlined above. For example, theoretically, the recovery
rebate will not disqualify recipients of means-tested benefits for twelve (12)
months after receiving the rebate. However, if any money in excess of the
resource limits remains at that time, then we know that the recipient would
definitely become disqualified from benefits. Furthermore, even if the
recipient does spend-down the rebate money within the 12-month period, the
caseworkers who process SSI/Medicaid applications and re-determinations have
never dealt with this type of widespread situation before, and will therefore
be navigating an uncharted territory, likely with very limited guidance to
help them. This increases the risk that the CARES Act’s exception to the
general SSI/Medicaid eligibility rules which exists on paper may not uniformly
be implemented in practice, resulting in unnecessary headaches and economic
difficulty for the recipients.
If
you or anyone you know receives SSI or Medicaid benefits, consider seeing an
attorney with experience in special needs planning to ensure that you have a
plan in place for your recovery rebate and can continue to maintain your
government benefits seamlessly after this health crisis is over.
