Indiana Medicaid Recipients and Stimulus Money

Generally, Medicaid recipients who receive at-home, assisted living, or nursing home coverage have income limits, asset limits, and are restricted on the amount they can gift and transfer.  Benefits and coverage can be lost, delayed, or discontinued, under some circumstances.  There are exceptions such as allowable transfers and gifts between spouses, or to their disabled child. 

Most Americans, including those on Medicaid for at-home services, nursing homes, or assisted living have received several rounds of stimulus checks per adult. $1,200, then $600, and last checks were authorized in February 2021 for $1,400.  My office receives numerous inquiries how these checks/deposits should be handled by our current and past Medicaid planning clients to preserve their Medicaid coverage and benefits. 

A person on Medicaid must keep their “countable” assets below $2,000 at the beginning of each month.  Also, income received in a month can also affect how much must be paid to the nursing facility for the liability to the nursing home.

There is good news. The stimulus checks do NOT count as income and do not need to be paid to the nursing home.   Further, the recipient has 12 months to spend or gift the stimulus money before it becomes a countable resource toward the $2,000 of countable assets.  No transfer penalty or cessation of Medicaid benefits will occur if the stimulus money is spent or gifted within 12 months of receipt.  The same rules apply to a federal tax refund since the stimulus check payments are treated similar in the Medicaid context.

Another gifting rule which is completely unrelated to the receipt of the stimulus money, is the “de minimis” gifting rule.  Each year, a Medicaid recipient can give total gross amount of $1,200 away to immediate family without incurring a transfer penalty from Medicaid.  Any amounts above this $1,200, other than the allowable gifting of the stimulus money, would be subject to a transfer penalty imposed by Medicaid. A Medicaid recipient can gift the stimulus payments and an additional gross total $1,200 to immediate family each year and not affect their ongoing Medicaid benefits and coverage.

These laws and rules are complex and ever changing and many times are connected, other times, not.  The facts of every client are different and fact sensitive.  It is important to consult with a knowledgeable elder law attorney as well as a tax advisor for the gift and tax issues of the Medicaid recipient or benefits can be impacted.