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 was 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) issued non-taxable economic impact payments (stimulus checks) to most Americans, including veterans who receive Veterans Affairs (VA) pension benefits.
On December 27, 2020, a $900 billion economic relief bill, the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, was passed. Intended to further stimulate the economy, a second round of COVID-19 stimulus checks are being issued to the majority of Americans. The issue of payments began on December 29, 2020.
Many veterans are concerned how these checks (the first check up to $1,200 / the second check up to $600 for an individual) will impact the receipt of their current VA pension benefits. Do the stimulus checks count as income, which can push veterans over the VA’s maximum annual pension rate (MAPR), or will they 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 stimulus checks in their entirety be spent within 12 months of receipt. This is because it is thought that the VA will count any remaining stimulus money after 12 months 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 checks. This is because the money from the stimulus checks 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 income eligibility for pension benefits, the receipt of a stimulus checks by the spouse do not count as income. This means it cannot be cause for disqualification of benefits.
Unrelated to the stimulus checks, 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 is 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 their stimulus checks. 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 does not count as assets. This means that a veteran residing in a nursing home is not 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. 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 checks 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. 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.
Veterans who receive VA pension benefits do not have to take action to receive their stimulus checks. However, one exception exists and this is for veterans who have dependent children under 17 years old. Prior to the first stimulus check, a veteran needed to enter personal information into the online non-filers tool in order to receive the extra payment for dependent children. This tool is now closed, but veterans can claim a recovery rebate credit for dependents on their 2020 tax return for both the first stimulus payment ($500 / child) and the second stimulus payment ($600 / child).
Stimulus checks 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 (or a pre-paid debit card) 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 stimulus checks does not impact their benefits in any way. The VA does 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 stimulus checks by a veteran’s spouse does not count as income towards pension benefit eligibility.
Nor do the stimulus checks count as assets, which means that the receipt of the funds by the veteran (or the veteran’s spouse, if applicable) do 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. Veterans with dependent children under 17 previously needed to use an online non-filers tool prior to the first stimulus check to receive the extra stimulus money for these children. While this tool is no longer available, stimulus money for dependent children can still be received by filing a 2020 tax return and claiming a recovery rebate credit. The credit is $500 / child for the first stimulus check and $600 / child for the second stimulus check.
How veterans receive their stimulus checks depends on the manner in which they receive their pension benefits. Those who receive them via direct deposit, receive the stimulus checks via direct deposit, and those that receive them in the mail, receive the stimulus checks in the mail.
Veterans Living at Home
For veterans who live at home and receive VA pension benefits, receiving stimulus checks do not negatively impact their benefits. Stated differently, the receipt of the stimulus money does not cause them to lose their pension benefits. This is partially because the VA does not consider these funds as income for the veteran (or a spouse, if applicable). This means receiving the stimulus checks 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 checks do 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 as countable 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 COVID-safe weekend getaway, 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. 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 should have used the online non-filer tool prior to the first stimulus check in order to receive the additional stimulus money for having a dependent child(ren). This tool has since closed, but recovery rebate credits can be received for the first stimulus check ($500 / child) and the second check ($600 / child) by filing a tax return in 2020.
The economic impact payments are received in the same manner in which veterans receive their VA pension benefits. Veterans whose VA benefits are directly deposited in their bank accounts receive their stimulus checks as direct deposits, and veterans who receive their VA benefits via a check in the mail, 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 stimulus checks will result in a denial of benefits. This is because the money from the checks is not 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 stimulus checks received by a veteran’s spouse; the money does not count as income.
The stimulus check funds do 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 thought that stimulus money given away by VA pension applicants (and spouses, if applicable) during the first 12 months of receipt is not a violation of the look back period. However, after the 12-month period, stimulus money should not be gifted.
VA applicants 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, stimulus checks are received in this manner. If the refund arrived via a check in the mail, this is the way stimulus checks are received. For persons who receive Social Security and did not file tax returns, stimulus checks are also sent automatically. As with the tax refunds, Social Security beneficiaries receive stimulus checks 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 can still receive stimulus money by filing a 2020 tax return and claiming a recovery rebate credit.