With a new round of stimulus payments arriving due to the 2021 American Rescue Plan, some individuals have concerns about how these payments may impact eligibility for need-based government benefits. The good news is that these payments are not considered income and will also not be a countable asset unless it has been kept unspent for a year. Therefore, stimulus payments should not affect a person’s eligibility for need-based government benefits. Individuals should simply make sure that they spend the money before a year has elapsed. If an individual has an ABLE account, then the money could also be placed in the ABLE account.
One situation to watch out for is if a person who has died receives a stimulus payment. If this occurs, the payment must be returned to the IRS. If the check has not yet been cashed, then the check must be sent back to the IRS. If the check has already been cashed or was received as a direct deposit, then a check must be sent to the IRS in the amount of the payment received. Where the checks get sent back to depends on where a person lives. The returns must also be formatted in a specific way. More information on where to send the checks and how to make the return can be found here:
https://www.aarp.org/money/taxes/info-2020/stimulus-check-in-deceased-name.html
One potential benefit for people who lost a loved one to COVID-19 is that FEMA will offer an assistance program to reimburse funeral and burial costs for people who, according to their death certificate, died either directly or indirectly from COVID-19. The death must have occurred in the United States and the person seeking reimbursement must either be a U.S. citizen, non-citizen national, or a qualified alien. The program will cover up to $9,000 in funeral and burial expenses for eligible individuals. However, the program does not cover funeral and burial expenses already covered by funeral/burial insurance or another agency.
Detailed guidance is still being finalized for the program and FEMA will not begin accepting applications until April 12, 2021. At that point FEMA will accept applications through their call center at the number 1-844-684-6333. In the meantime, interested individuals should gather documentation detailing their eligibility including the official death certificate, funeral/burial expense documents, and coverage received from insurance and other agencies.
For questions about stimulus payments affecting benefits or funeral expense planning, please call Mitchell, Brown & Associates at (314) 962-0186.
