This week we heard from a client about his brother’s CARES Act payment:
“My brother Dave, who receives SSI and is on AHCCCS, just got his CARES Act check for $1200. Actually, I got it, since I am his representative payee. I am very worried that he might lose his long-term medical care benefits under ALTCS. Can I just send the check back? Should I spend it immediately? Can I send it to ALTCS to pay down his care costs?”
There’s a lot packed into that question. Let’s pick it apart a little bit (which we’re doing here with the client’s permission, incidentally).
The CARES Act payment
In the past two months the federal government has sent out millions of “economic impact” payments to its citizens. Sometimes people refer to the money as “stimulus” payments, though that’s not quite the right name. For people receiving benefits from the Social Security Administration, the payments arrive in the same fashion as those benefits payments.
The payments were, of course, welcome news to most who received them. But for some people, they were a cause for anxiety.
Because Dave has a disability, he receives monthly payments from the Supplemental Security Income (SSI) program. That $783 check has to cover nearly all of his needs — including housing, food, and everything else from transportation to entertainment. He does also get some help with food costs (through the SNAP program) and rent (through a rent subsidy program).
One big issue for Dave is his medical care. He needs regular mental health treatment, and he is enrolled in Arizona’s version of Medicaid, the Arizona Health Care Containment System (AHCCCS). His mental health care actually comes from a division of that program, called ALTCS (the Arizona Long Term Care System).
Financial eligibility for benefits
As Dave’s brother knows all too well, most of the benefits Dave receives are “means-tested.” If his assets climb above $2,000, he can lose his SSI and his ALTCS benefits, at least. With income over the SSI maximum of $783 in a month, he might lose all of his benefits — at least for that month.
But the news for Dave (and his brother) is good: CARES Act payments are not income for public benefits purposes. Not for SSI, nor for AHCCCS or ALTCS, and not even for SNAP or housing subsidies.
Note that most of the benefits Dave receives are funded by the federal government. AHCCCS and ALTCS are partly funded by, and fully administered by, the state of Arizona. But that doesn’t change anything. The CARES Act payment is not income for either federal or state eligibility purposes.
What about asset limitations?
But Dave’s brother is actually worried about a different problem. Because Dave actually lives in a state-operated care facility, his brother has a hard time spending the monthly checks he gets. His assets are always near the $2,000 asset limit for SSI and ALTCS. In fact, when he wrote his question, Dave’s account had suddenly jumped to almost $3,000, and Dave’s brother was worried.
We could give him more good news: the CARES Act payment doesn’t count against asset limitations, either. At least, that is, not for twelve months.
So Dave’s brother could leave the CARES Act payment sitting in Dave’s representative payee account for up to a year. There would be no effect on Dave’s SSI or ALTCS benefits.
Note, though, that the special treatment is only for CARES Act payments. If the account jumps above $3,200 in the next year, Dave’s benefits could still be interrupted. But that should give his brother plenty of time to plan for spending down the money.
What about next year’s tax time?
Will Dave’s $1,200 payment require him to file a tax return next year, or even to pay taxes? No. The check is not income for tax purposes, either.
That’s also true for Arizona state income taxes. Dave will not have to file a state income tax return because of his CARES Act payment, either.
Dave’s brother worried that perhaps he would have to return some part of his benefit check at tax time next year if it had not been sent. We reassured him that was not an issue, either. Dave’s check will not be reportable, will not affect his benefits or his taxes. The only concern is to make sure it has been spent or disposed of within twelve months.
How can Dave’s brother spend the money?
For most recipients, spending the CARES Act payment will not be hard at all. People living on $783/month almost always need other things taken care of, and the additional money was (or will be, if it hasn’t yet arrived) be welcome.
But remember that Dave’s brother has a hard time keeping his account below the $2,000 threshold. How can he utilize the money over the next year? We offered a handful of options for him to consider:
- Because Dave started receiving his SSI benefits before he was 26 years old, he is eligible to have an ABLE Act account. In fact, that would be a good way to keep Dave’s balance below the $2,000 level in the future, as his brother keeps struggling with how to spend his checks (and keep him eligible for ALTCS).
- Dave’s brother could make prepaid funeral/burial arrangements for Dave. While not essential for Dave’s current care, it would remove one anxiety point for the coming years.
- ALTCS doesn’t cover everything. One notable shortcoming: dental care. If Dave requires (or would benefit from) dental surgery, or extensive dental work, this might be a good time to arrange and pay for it.
There are other good ideas, of course — but Dave’s individual circumstances should be considered in figuring out how to proceed. We will consult with his brother to figure out what works best for him.
Taking care of a brother with a disability can be challenging, as Dave’s brother knows full well. We were delighted to be able to reassure him that the CARES Act payment would not complicate his — or Dave’s — life.
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