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IRS Alert: EIPs Do Not Belong to Recipients’ Nursing Home, Care Center

The Internal Revenue Service is making it clear to nursing homes and other care facilities that they have no right to appropriate the economic impact payments (EIPs) of their elderly patients. Concerns had been raised that some people and businesses could be taking advantage of the elderly who received the payments.

The IRS spells it out plainly: “The payments are intended for the recipients, even if a nursing home or other facility or provider receives the person's payment, either directly or indirectly by direct deposit or check. These payments do not count as a resource for purposes of determining eligibility for Medicaid and other federal programs for a period of 12 months from receipt. They also do not count as income in determining eligibility for these programs.”

What did the Social Security Administration say?

The Social Security Administration (SSA) has issued its own Frequently Asked Questions on the issue as part of their coronavirus information. The FAQs include how representative payees — people who have been appointed to receive SSA benefits for another person who is incapable of managing their own benefits — should handle administering EIPs for the recipient.

Under the Social Security Act, a representative payee is only responsible for managing Social Security or Supplemental Security Income (SSI) benefits. An EIP is neither of these benefits; it belongs only to the Social Security or SSI beneficiary.

The SSA says a representative payee should discuss the EIP with the beneficiary. If the beneficiary wants to use the EIP independently, the representative payee should provide the payment to the beneficiary.

Are EIPs are tax refunds?

The IRS also notes that Economic Impact Payments do not count as one of the resources that have to be turned over by benefit recipients — such as residents of nursing homes, whose care is provided by Medicaid. The EIP is considered an advance refund for 2020 taxes, it is therefore a tax refund for benefits purposes.

The IRS noted the language in the Form 1040 instructions apply to Economic Impact Payments: "Any refund you receive can't be counted as income when determining if you or anyone else is eligible for benefits or assistance, or how much you or anyone else can receive, under any federal program or under any state or local program financed in whole or in part with federal funds. These programs include Temporary Assistance for Needy Families (TANF), Medicaid, Supplemental Security Income (SSI), and Supplemental Nutrition Assistance Program (formerly food stamps). In addition, when determining eligibility, the refund can't be counted as a resource for at least 12 months after you receive it.”

For more information about Economic Impact Payments and representative payees involving Social Security or Supplemental Security Income benefits, check out the Social Security Administration’s coronavirus webpage.

The IRS has more information on the Economic Impact Payments at IRS.gov/eipfaq.

Bob Williams

Forget genes; I’ve got words in my DNA. Communication has been part of who I am nearly all my life. From a long career in radio news to another one in newspapers – and a University of Georgia journalism degree sandwiched between the two – language has been my life. I’ve also been fortunate to have learned the tax business from the ground up here at Drake, starting with 1040.com online forms some years ago before moving on to work on the Web. In all things tax-ish, we aim to give you tools you can use.

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