If you or a loved one needs long term care, you might have to rely on the Medicaid program to pay for most of the cost of that care. Since nursing home care on average costs over $10,000 per month in Florida, most people do not have enough income to pay that without rapidly decreasing their savings. But if your income exceeds Florida’s income cap you will be ineligible for Medicaid unless you have prepared, executed and funded a qualified income trust (QIT). Currently Florida’s income cap for the Medicaid program is $2523 gross income monthly. Therefore it is possible to have too much income to qualify for Medicaid but not enough to pay for your monthly nursing home bill for anyone with income between $2523 and $10,000 monthly. That is where a QIT comes into play. Here are some important things to know when setting up a QIT:
- Manage Your QIT Carefully
Before making an application for Medicaid long-term care, you must have the QIT in place and funded. Additionally a QIT must be managed very carefully. Every month that Medicaid long-term care is required, whether in the home, in an ALF, or in a nursing home, the income trust must be properly funded. If your monthly income exceeds the income cap, funds must be deposited into the QIT each month. Enough funds must be deposited to ensure your income is below the threshold, and this amount should be more than the bare minimum needed to qualify for Medicaid. To prevent a lapse in coverage and care, it is crucial to ensure that your QIT is funded and administered properly.
- If Your Income Does Not Exceed the Income Cap, a QIT is probably not Needed
If your income does not exceed the state of Florida’s income cap (currently $2523), then a QIT may not be necessary. However, if there is a chance that your income may exceed the cap on any given month, a QIT will help ensure that you don’t lose your Medicaid benefits. As an example, for those who have gross incomes that are close to Florida’s Medicaid income cap, we suggest a QIT to prepare for the possibility of increased income such as an annual nationwide rise in Social Security or VA payments.
- QIT Income May Still go to the Nursing Home
If you are a single applicant, the funds in your QIT will be disbursed to the facility that is administering your care. If you are married and your spouse is living at home, the income may be partially or wholly diverted to your spouse, depending on his or her income level. If you are not in a nursing home, you still need a QIT and you will not lose any of your income (funds deposited into the QIT can be withdrawn to pay for the needed health and care expenses at home or in an assisted living facility.)
- A QIT May Require a Proper Durable Power of Attorney
A QIT is an important part of the Medicaid planning and estate planning process. A proper durable power of attorney is required in order to create a QIT should the Medicaid applicant become incapacitated. In most cases a spouse can also create a QIT without having a durable power of attorney. If there is no spouse and the Medicaid applicant is incapacitated, their durable power of attorney must have the power to create the trust, and all documents must be signed properly. The ability for the agent under the power of attorney to create a QIT is referred to as a “super-power” and must be separately initialed. Otherwise, the agent under the power of attorney will not have the power to create the trust.
- Income Must be Deposited Properly
Medicaid applicants can choose to deposit at least the minimum amount of income required (whatever exceeds the income cap). Some choose to deposit slightly more than what is strictly necessary. However it is crucial to count gross income. The amount of Social Security that is deposited into your bank account is not the full income amount, because Medicare premiums are automatically deducted (for most retirees.) Some pensions also deduct amounts for fees, paying for life insurance or health insurance, and other expenses. All of this must be added back to calculate the gross income rather than net income. Only income should go into a QIT, not assets.
- Upon Death, Assets in the QIT will be Given to the State
Upon the Medicaid recipient’s death, any remaining amounts in the QIT will likely be returned to the state. The state may take the income to recover the expenses paid by Medicaid for the beneficiary’s care. Any funds that remain after the state has been reimbursed will be paid to the other trust beneficiaries. For this reason, you should view the QIT as a “pass through” account with minimum amounts remaining each month after paying the facility. Normally a QIT will be empty or have only one month’s deposit at the time of the applicant’s death (assuming the account has been managed properly.)
- QITs Should be Established by an Experienced Elder Law Attorney
Anyone who may be eligible for Medicaid can establish a QIT, but the trust can only be used when long-term care is required. The preparation of a Trust is legal work and may not be handled by a non-lawyer (that is called Unauthorized Practice of Law and punishable under the laws of the state of Florida.). Furthermore, the process of setting up, and properly funding and managing a QIT can be complex, and you do not want to take the risk of compromising critical long-term care. The stakes are too high. A QIT should be handled by an experienced elder law attorney who focuses on the needs of seniors including Medicaid planning. This specialist will know how to help you navigate the process of establishing the income trust and ensuring that it is administered properly. One misstep or error can result in you being ineligible for Medicaid and losing long-term care coverage. If you need help establishing a QIT or otherwise planning for Medicaid, feel free to reach out to Burzynski Elder Law at 239-434-8557