On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act was signed into law. Also referred to as the CARES Act, this 2.2 trillion dollar stimulus package is intended to boost the economy from the devastating impact of the Coronavirus (COVID-19) pandemic. As part of this bill, the Internal Revenue Service (IRS) is issuing non-taxable economic impact payments (stimulus checks) to most Americans, including veterans who receive Veterans Affairs (VA) pension benefits.
Many veterans are concerned how these checks (up to $1,2000 for an individual) will impact the receipt of their current VA pension benefits. Does the stimulus check count as income, which can push veterans over the VA’s maximum annual pension rate (MAPR), or will it count as assets, which could cause a veteran’s net worth (assets plus annual income) to be too high? Could the stimulus money result in the loss of monthly monetary benefits, whether it be the basic pension, the Aid & Attendance (A&A) pension, or the Housebound pension? Could the funds cause a Veteran applying for pension benefits to be denied eligibility?
Please note that it is vital that the entire stimulus check be spent within 12 months of receiving it. This is because it is thought that the VA will count any remaining stimulus money after 12 months of receipt as an asset. This means that the assets could push a veteran pension beneficiary or applicant over the VA’s net worth, which could cause the individual to be disqualified or denied for receiving VA pension benefits.
Stimulus Check Impact for VA Pension Beneficiaries
Nursing Home / State Veterans Home Residents
Veterans who are VA pension recipients who reside in nursing home facilities are not at risk of losing their VA benefits upon receipt of the stimulus check. This is because the money from the stimulus check will not count as income for VA purposes. Therefore, it cannot possibly push a veteran over the VA’s maximum annual pension rate, causing a veteran to be income ineligible. For married veterans, while the VA calculates the income of both a veteran and his / her spouse when determining if a veteran is income eligible for pension benefits, the receipt of a stimulus check by the spouse will not count as income. This means it cannot be cause for disqualification of benefits.
Unrelated to the stimulus check, there may be a reduction in monthly VA pension payments for some veterans who reside in nursing homes. Take, for instance, a veteran who receives basic pension plus Aid & Attendance. Given the following circumstances, the pension benefit will be reduced to a personal needs allowance of $90 / month.
• The veteran does not have a spouse or a dependent child.
• The veteran enters a Medicaid-approved nursing home.
• Medicaid is paying for the nursing home care.
An important note related to this scenario and stimulus checks is that veterans whose benefits are reduced to a $90 personal needs allowance will not be required to relinquish his / her stimulus check. Stated differently, the veteran will be able to keep the money since it is not considered to be income by the VA or Medicaid. (Learn more about how stimulus checks impact eligibility for persons on Medicaid.)
Furthermore, the money from the stimulus check will not count as assets. This means that a veteran residing in a nursing home will not be at risk of losing his / her pension benefits due to having excess assets that push him / her over the VA’s net worth limit. That said, it is thought that if the money is not spent in its entirety within 12 months of receiving it, it will be counted as assets by the VA. What this means is that it could push a veteran over the net worth limit, resulting in a loss of VA benefits. Therefore, it is extremely important that all of the money be spent within a year of receipt. To be clear, for married veterans, spouses of veterans should also spend the entirety of their stimulus checks within 12-months of receipt. This is because the VA counts all assets of the married couple towards the VA’s net worth limit.
The funds from the stimulus check can be spent in a number of ways by a veteran residing in a nursing home. For instance, a veteran might want to purchase an item for his / her room that makes it feel cozier, such as a radio, a television, or a digital picture frame, or purchase his / her favorite snacks that can’t usually be afforded. That said, the money should not be used to purchase items that the VA would consider to be countable assets, such as U.S. savings bonds. This is because these would be counted as assets and calculated towards a veteran’s net worth, potentially pushing a veteran over the limit and resulting in disqualification of benefits.
There is no action that veterans who receive VA pension benefits must take in order to receive their stimulus checks. While some people who did not file 2018 or 2019 tax returns must utilize the Non-Filers: Enter Payment Info Here tool, pension recipients do not fall into this category. However, there is one exception that exists and this if the veteran has children younger than 17 years old. In this case, the veteran needs to enter personal information into the non-filers tool in order to receive the extra payment ($500 / child) for dependent children. (Click here for the Non-Filers: Enter Payment Info Here tool).
The stimulus check will be received by veterans in the same way in which they receive their monthly pension benefits. This means that if a veteran’s pension is electronically deposited in his / her bank account, so will the economic impact payment. On the other hand, if pension checks are received via a check in the mail, a paper check will arrive in the mail as the stimulus payment.
Assisted Living / Memory Care Residents
For veterans who receive pension benefits and reside in assisted living residences or memory care units / facilities for persons with Alzheimer’s disease and related dementias, receiving a stimulus check will not impact their benefits in any way. The VA will not count the stimulus money as income, which means it cannot cause a pension beneficiary to have income over the maximum annual pension rate, resulting in disqualification of benefits. To avoid any confusion, for married couples, the receipt of a stimulus check by a veteran’s spouse will not be counted as income towards pension benefit eligibility.
Nor will the stimulus check count as assets, which means that the receipt of the funds by the veteran (or the veteran’s spouse, if applicable) will not cause him / her to exceed the VA’s net worth limit. There is, however, one caveat; if the stimulus money is not spent within 12-months of receiving it, it is thought that the remaining funds will count as assets. This means any money not spent by the veteran, (or his / her spouse, if applicable), within this timeframe will be calculated towards the veteran’s net worth and could potentially cause him / her to be over the net worth limit, resulting in the loss of pension benefits.
There are many ways in which money from the economic impact payments can be spent by veterans residing in assisted living residences / memory care units. As an example, take a veteran who is confined to his / her room in assisted living and receives the Housebound pension. The stimulus money might be used to buy new comfortable clothing, an essential oil diffuser, audio books, or a burial plot. While there are many options as to how the money can be spent, it is extremely important the veteran (or his / her spouse, if applicable) not purchase items that are considered as countable assets by the VA. Essentially, items, such as collector coins, that can easily be liquidated for cash are considered to be countable (non-exempt) assets. Assets that are not exempt are calculated towards the VA’s net worth limit, and hence, could cause a veteran to be over the limit and lose his / her pension benefits.
In order for veterans who receive pension benefits and live in assisted living / memory care to receive their stimulus checks, there is nothing that needs to be done. This is because veteran pension benefit recipients will automatically receive their stimulus checks. However, veterans who have dependent children under 17 years old must use the Non-Filers: Enter Payment Info Here tool in order to receive the extra stimulus payment of $500 per dependent child.
How veterans will receive their stimulus checks will depend on the manner in which they receive their pension benefits. Those who receive them via direct deposit, will receive the stimulus check via direct deposit, and those that receive them in the mail, will receive the stimulus check in the mail.
Veterans Living at Home
For veterans who live at home and receive VA pension benefits, receiving a stimulus check will not negatively impact their benefits. Stated differently, the receipt of the stimulus money will not cause them to lose their pension benefits. This is partially because the VA will not consider these funds as income for the veteran (or a spouse, if applicable). This means receiving the stimulus check cannot incidentally push a veteran’s income over the maximum annual pension rate, resulting in disqualification of eligibility for a VA pension.
Secondly, the funds from the stimulus check will not count as assets in the first 12-months of receiving them. This means that as long as a veteran (and his / her spouse, if applicable) spends the funds in their entirety within a year, they will not be considered as assets for VA purposes. However, if all (or some) of the money does remain unspent after that timeframe, it is thought that the money will be considered to be assets. This can, unfortunately, result in a veteran having a net worth higher than the VA allows, resulting in the loss of pension benefits.
Ways in which the stimulus money can be spent are numerous. For instance, take a veteran receiving the basic VA pension, he / she might spend the money on a weekend getaway once the shelter at home order has been lifted, buy a lounge chair for his / her home, pay bills, or purchase a burial policy. However, a veteran (and spouse, if applicable) should use caution when spending the money in order to avoid purchasing assets that the VA will count towards the net worth limit. For example, stocks would count as assets and could potentially cause a veteran to have a net worth greater than the allowable amount. If this happens, the veteran could be disqualified from receiving pension benefits.
Veterans who receive VA benefits do not have to take any steps in order to receive their stimulus checks. To be clear, this means that they did not have to file tax returns in 2018 or 2019 or input personal information in the Non-Filers: Enter Payment Info Here tool. That said, there is one exception and that is if a veteran has a child 16 years old or younger. If this is the case, the veteran will have to use the non-filer tool in order to input personal information and receive the additional stimulus payment for having a dependent child(ren). (To go to the Non-Filers: Enter Payment Info Here tool, click here).
The economic impact payment will be received in the same manner in which veterans receive their VA pension benefits. Veterans whose VA benefits are directly deposited in their bank accounts will receive their stimulus checks as direct deposits, and veterans who receive their VA benefits via a check in the mail, will receive their stimulus payment in the mail via check.
Stimulus Check Impact for VA Pension Applicants
Veterans who are (or will be) applying for VA pension benefits should not be concerned that receiving a stimulus check will result in a denial of benefits. This is because the money from the check will not be counted as income by the VA, which means it cannot potentially cause one to have income over the maximum annual pension rate, making one ineligible for benefits. This holds true for a stimulus check received by a veteran’s spouse; the money will not count as income.
The stimulus check funds will not initially count as assets either. In fact, it is thought that a veteran (and his / her spouse, if applicable) has 12-months to spend the stimulus money prior to it counting as assets. If the money is not spent and it is counted as assets, it will count towards a veteran’s net worth limit, which could cause a veteran to exceed the limit and be denied pension benefits.
For VA pension applicants (or those considering applying) stimulus money can be spent in a variety of ways, such as paying off debt, buying extra food, or splurging on a kitchen appliance he / she otherwise wouldn’t buy. That said, it is extremely important that the applicant (and his / her spouse, if applicable) not purchase items that the VA would consider countable assets. This is because countable assets are calculated towards a veteran’s net worth and if one has a net worth greater than the limit, he / she can be denied VA pension eligibility. Generally speaking, countable assets are ones that can easily be converted to cash.
Please note that the VA has a look back period of 3 years. What this means is that for 3 years immediately preceding a veteran’s pension claim, the VA scrutinizes all past asset transfers. If a veteran has given assets away or transferred them for less than fair market value, the veteran will be penalized with a period of ineligibility from VA pension benefits for up to 5 years. (This rule only applies if the assets gifted or sold under fair market value would have caused a veteran to be over the net worth limit). With this being said, it is vital that VA pension applicants (and spouses, if applicable) not give the stimulus money to their grandchildren for college or gift it to their favorite charity.
VA applicants will receive their economic impact payments automatically via electronic deposit or a check in the mail. The way in which the method of delivery is determined is based on how one received their 2018 or 2019 tax return. If the refund was received via direct deposit, the stimulus check will be received in this manner. If the refund arrived via a paper check in the mail, this is the way the stimulus check will be received. For persons who receive Social Security and did not file tax returns, the stimulus check will also be sent automatically. As with the tax refunds, Social Security beneficiaries will receive the stimulus check in the same manner in which they receive their Social Security benefits.
If taxes weren’t filed in 2018 or 2019 and the VA applicant does not receive Social Security benefits, he / she may need to use the Non-Filers: Enter Payment Info Here tool to input relevant personal information. Go to the tool here.