Under a 1994 federal law, (h.r. 1873 or public law 103-286), known as the Victims of Nazi Persecution Act of 1994, Holocaust compensation payments made to individuals based on their status as victims of Nazi persecution are excluded from being counted as income and resources in determining both eligibility for and the amount of benefits to be provided under any Federally funded program based on financial need. This means payments made to victims of Nazi persecution do not increase the countable income, and therefore do not increase the Medicaid "spend-down" of Holocaust survivors and other Nazi victims. Savings accumulated from reparations are not counted as resources. The same exemption applies to Supplemental Security Income, Food Stamps and Federally subsidized Housing programs.
More information is in this article and in this Fact Sheet.
Update March 2021 - SSA Confirms Supplemental Hardship Payments not Counted for SSI (and Medicaid)
Social Security Administration has issued an emergency message regarding the Claims Conference’s new Supplemental Hardship Payments: PolicyNet/Instructions Updates/EM-21014: Supplemental Hardship Fund Payments to Jewish Nazi VictimsOne-Time-Only Instructions (ssa.gov)
Because the Hardship Fund is targeted overwhelmingly to FSU survivors, most of whom receive SSI, there are concerns some may face disruption of SSI or alleged overpayments. The payments are also exempt for Medicaid and all other federally subsidized benefits and most State subsidized benefits as is all restituton (EPIC, SCRIE/DRIE).
Update - December 2014 -- Inherited Reparations are Exempt
On Dec 16, 2014, the Social Security Administration issued Emergency Message EM-14060 regarding “inherited reparations.” This emerency message is no longer posed, but SSA has amended the Social Security Program and Operations Manua (POMS) l to add:
This policy clarifies that reparations payments that are passed to a successor after the original recipient’s death continue to be excluded from income and resources for SSI purposes, if the payments would have been exempt when received by the Nazi victim. Since Medicaid rules cannot be more strict than SSI rules for people age 65+, this policy, in NYLAG's view, must be followed by Medicaid programs as well. 42 U.S.C §§.1396a(a)(10)(C)(i)(III); 42 C.F.R. §§ 435.831(b), 435.845, 436.601. See news coverage in Jewish Week and the New York Observer about this policy clarification.
Update -October 2014 -- Ghetto Pension & "WEP" Updates
The Social Security Administration updated its online Program & Operations Manual (POMS) in TWO WAYS to ensure that the GHETTO PENSION or ZRBG does not reduce SSI or Social Security:
The Conference on Material Claims Against Germany hosts a webpage with information about this important exception, with materials authored by Selfhelp Community Services, Inc., an organization that had its origins in assisting people fleeing from Nazi Germany in 1937.
Reparations in General - Excluded from Medicaid, SSI and other Federal Benefits
* The Fact Sheet gives information about an important administrative hearing decision rendered in 2007 that clarifies proof needed to exempt accumulated savings when a Nazi victim applies for Medicaid. A redacted copy of this 2007 decision is posted here also described in this press release.
* A transfer of restitution does not trigger a "transfer penalty," so does not detrimentally impact eligibility for Medicaid to pay for nursing home care. See NYS Medicaid Reference Guide - Resources Chapter p. 441.
* The brochure also explains that EPIC, SCRIE, and other New York State-funded benefits, with no federal funding, do not count German reparations as income.
* Nov. 2017 update includes new information about a new restitution program started by the Polish government.
German Social Security and the Ghetto Pension
Other Federal Benefits and Reparations -- An opinion letter from the Baltimore office of the U.S. Dept. of Housing & Urban Development, dated Jun 1, 2009, interprets the same exemption for Nazi reparations as it applies to an application by an elderly Holocaust survivor for Section 202 federally subsidized housing. She had purchased a house in 2004 with saved reparations. Under the usual rules, while the house would not disqualify her from being accepted as a tenant in Section 202 housing, interest on the house as an asset would normally be imputed to her. The opinion letter states that "reparation payments, their interest and assets, such as homes and bank accounts, should be excluded in calculating the income eligibility of Section 202 applicants." This letter might be useful for other federally funded benefits.
Taxes and Reparations -- See IRS News Release announcing exemption from income taxation enacted in 2001 Economic Growth and Tax Relief Reconciliation Act, Sec. 803. (News release includes actual text of law). This provision of the 2001 law originally had a "sunset clause," but was extended indefinitely under the the “Holocaust Restitution Tax Fairness Act of 2002” -- see this link. See also IRS Publication 525 (see page 31). Law exempts from income tax, in part, any payment or distribution to an individual (or his heirs or estate) which is payable by any foreign country, the United States of America, or any other foreign or domestic entity, by reason of the individual's status as an "eligible individual", defined as a "person who was persecuted on the basis of race, religion, physical or mental disability, or sexual orientation by Nazi Germany, any other Axis regime, or any other Nazi-controlled or Nazi-allied country.”
Bank Fee Waivers and Reparations -- certain banks have agreed to waive wire transfer fees for electronic receipt of reparations.
Online Training -- Watch our online training on Holocaust reparations and Medicaid -- CLE credit available.
This article was authored by the Evelyn Frank Legal Resources Program of New York Legal Assistance Group.