|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.