Medicaid is a needs-based program, which means if your income and / or assets are too high, you won’t qualify. What happens in scenarios where your income exceeds the income limit, but you do not make enough to cover the costs of care? It is possible in the right circumstances, to still qualify if your income is too high with the creation of a Qualified Income Trust (QIT). A QIT is an irrevocable trust managed by a trustee and any income in that trust is not counted for Medicaid eligibility.
Qualified Income Trusts are highly regulated and have specific requirements. If not properly drafted, a QIT could cause more problems than solutions. The three key requirements are as follows:
- The applicant’s income funds the trust
- The Trustee cannot be the applicant
- The trust may only use the income to pay for the costs of the nursing home, a personal allowance, medical expenses, or making payments to a spouse.
In 2021, an individual may have up to $2,382 per month in income when applying for Medicaid for nursing home care. A married couple may have up to $4,764 in income, if they are applying for nursing home care together. If only one spouse plans on entering the nursing home, the other spouse’s income is disregarded.
All of your income does not need to go into your QIT trust, but you do need to deposit anything above the Medicaid cap for the year. Because a QIT is an irrevocable trust, you cannot change it and you cannot access the money in it. Finding the right balance of funds to deposit into your QIT and funds to keep out should be done with the guidance of an attorney and careful planning.
A QIT can be a powerful planning tool, but is not the right fit for everyone. If you have income that causes you to be disqualified for Medicaid, but are concerned about long term care and available resources, a QIT is one of many options available that may help you to qualify for Medicaid. At Grissom Law, we look at all income and assets, as well as consideration for your long-term goals and plans to pass along your assets when determining what kind of trust will work best for your needs.
Disclaimer
This Blog/Web Site is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide legal advice. By using this blog site you understand that there is no attorney-client relationship between you and Grissom Law, LLC.