Personal Finance

Coronavirus rescue checks may shortchange some Americans on Social Security

Key Points
  • Lawmakers on Capitol Hill are working out the fine print on plans to send Americans checks in the wake of financial devastation caused by the coronavirus pandemic.
  • That has many wondering whether seniors, specifically those receiving Social Security benefits, will be included.
  • A new Senate bill does include Social Security income as one qualification. Advocates want lawmakers to make sure that no beneficiaries fall through the cracks.
Tara Moore | Getty Images

A  bill proposed by Senate Majority Leader Mitch McConnell, R-Ky., calls for sending checks of $1,200 to $2,400 to most Americans as a result of the economic damage stemming from the coronavirus outbreak.

Based on the language of the bill, most Social Security recipients should be covered.

But whether that will help or hurt seniors depends on the fine print of the legislation, which lawmakers are still wrestling with on Capitol Hill.

First, the measure calculates how much you receive from the government based on your 2018 tax return. And while that calls for $1,200 for individuals and $2,400 for those who are married and filing jointly, it can vary.

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If your tax bill is below $600 as an individual, you get $600. If your tax liability is above $1,200, it would be capped at $1,200. Those amounts would be doubled for married couples.

The catch is that you do have to have income to qualify. So counting Social Security benefits as income will help seniors, saidJeffrey Levine, director of advanced planning at Buckingham Strategic Wealth in Long Island, New York.

But there are individual circumstances that could be overlooked based on the current proposal. For starters, the checks that go out now are going to be based on 2018 tax returns.

Because of that, people's needs now might not be reflected in information from back then.

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"People's lives change so much in two years," Levine said. "Our world has flipped upside down in a span of weeks, and they want to key this towards something that's years ago? It just doesn't make any sense."

Specifically, some individuals who are receiving Social Security retirement benefits or welfare support through Supplemental Security Income, or SSI, might be excluded, said Webster Phillips, senior legislative representative at the National Committee to Preserve Social Security and Medicare.

If you receive Social Security benefits under $32,000 for couples, and don't have investment or other income, you may not be filing a tax return.

So if you're just living on money from Social Security benefits or SSI, it's not clear whether you would be eligible for a check, Phillips said.

We are hoping to see as broad a relief as possible to as many seniors as possible — all of them, ideally.
Webster Phillips
senior legislative representative at the National Committee to Preserve Social Security and Medicare

Back in 2009, the Obama administration sent a $250 one-time check to everyone receiving Social Security benefits, SSI or benefits through the Veterans Administration.

"We are hoping to see as broad a relief as possible to as many seniors as possible — all of them, ideally," Phillips said.

Regardless of where the negotiations land on bonus income, seniors can take heart in the fact that their monthly Social Security checks will not be interrupted, said Alicia Munnell, director of the Center for Retirement Research at Boston College.

"Social Security checks, which is really the mainstay for most seniors, are going to go out on time and continue just as they always had," Munnell said. "There's one component of seniors' income that they just don't have to worry about."

Yet many seniors also have a financial need for bonus checks, Munnell said. That goes especially for those who have been working to supplement their income and have lost that employment or those whose nest eggs have diminished.