For individuals who need financial assistance to pay for their long-term care costs, whether in an institutionalized setting or at home, Medicaid will cover such costs, provided that you meet certain financial and clinical requirements. Specifically, with respect to financial requirements, a single person applying for Medicaid cannot have more than $2,000 of assets, and his or her gross monthly income cannot exceed $2,349 (for 2021).
Historically, if a person’s income exceeded Medicaid’s income cap, they simply could not qualify for Medicaid in an assisted living community or for services they required at home (referred to as “community-based Medicaid”), even if they met every other requirement. However, beginning in 2014, New Jersey began to allow the use of Qualified Income Trusts (“QIT”), also commonly referred to as “Miller Trusts”. The use of a QIT allows individuals to qualify for all types of Medicaid, even if their income exceeds Medicaid’s income cap. However, it is important to understand how a QIT works and should be managed for a Medicaid applicant/recipient. The New Jersey Board of Social Services requires strict compliance with the funding and administration of a QIT. Failure to properly establish and fund a QIT could result in denial or delay of much-needed Medicaid eligibility.
What Exactly is a QIT?
A QIT is a type of trust, which allows a trustee to hold and administer the applicant’s/recipient’s income (i.e., Social Security and pension monies) in a trust bank account. The QIT bank account must be maintained separately from the applicant’s/recipient’s other assets. Someone must be appointed as the Trustee other than the applicant/recipient. It is extremely important that the Trustee administers and manages the Qualified Income Trusts properly because the activity of the QIT is monitored by the Board of Social Services in the county that the Medicaid application is submitted and, ultimately, approved.
There are stringent guidelines for the funding and administration of a QIT, including the following:
- The funds deposited into the QIT must be the applicant’s/recipient’s income only; a QIT cannot hold any other assets.
- The QIT must be initially funded with the income for the month that the applicant is seeking Medicaid eligibility. (It need not be funded prior to that time.)
- Thereafter, the recipient’s income must be deposited into the QIT each month during the month that it was received.
- No resources can be deposited into the QIT other than income. The income in the QIT cannot be commingled with the Medicaid applicant’s/recipient’s other assets.
- The QIT must be irrevocable. This means that neither the applicant/recipient nor the Trustee can make changes to the terms of the QIT.
- The State of New Jersey must be the primary beneficiary of any remaining funds in the QIT, upon the death of the applicant/recipient.
- Deposited income can only be used to pay for specific things. Specifically, the applicant/recipient can pay for his or her monthly premiums for supplemental health or prescription insurance out of the QIT checking account. Additionally, the applicant/recipient is entitled to a personal needs allowance from his or her income every month, which can be paid from the QIT checking account. (The amount of the personal needs allowance depends on one where the applicant/recipient is residing. Specifically, if the applicant/recipient is residing in an assisted living facility, he or she is entitled to a personal needs allowance of $117.75. The applicant/recipient is only entitled to a personal needs allowance of $50 if residing in a skilled nursing facility.) If the Medicaid recipient has a spouse residing in the community, the spouse may be entitled to a portion of the Medicaid recipient’s income, but that will depend on a variety of factors, including the community spouse’s personal income. The amount of income remaining in the QIT must be turned over to the facility.
It is the Trustee’s job to monitor the QIT in order to ensure that the deposits and payments are made according to the above guidelines. Failure to observe proper administration protocol of the Qualified Income Trusts could result in the applicant/recipient being deemed ineligible for Medicaid for a month or for an extended period of time.
Given that Medicaid guidelines and regulations are constantly in flux, it is important to seek guidance and assistance from an elder law attorney who can help you through the planning and application process in order to ensure that you or your loved one can obtain Medicaid benefits. Please call our office at 856-489-8388 or contact us through our website to schedule an appointment with one of our elder law attorneys.