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 can cost over $13,000 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) (sometimes called a “Miller Trust”). Currently, Florida’s income cap for the Medicaid program is $2,982 gross income per month. That means it is possible to have too much income to qualify for Medicaid, but not enough income to pay a monthly nursing home bill—especially for anyone with income between $2,982 and $13,000 monthly. That is where a QIT comes into play.
Important Things to Know When Setting Up a QIT
1. Manage Your QIT Carefully
Before making an application for Medicaid long-term care, you must have the QIT in place and funded. A QIT must be managed very carefully. Every month that Medicaid long-term care is required—whether in the home, in an assisted living facility, 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.
2. If Your Income Does Not Exceed the Income Cap, a QIT May Not Be Needed
If your income does not exceed Florida’s income cap (currently $2,982), then a QIT may not be necessary. However, if there is a chance that your income may exceed the cap in any given month, a QIT can help ensure that you don’t lose Medicaid benefits. For those with income close to the cap, we often suggest a QIT to prepare for possible increases, such as annual Social Security adjustments or changes to VA payments.
3. QIT Income May Still Go Toward the Cost of Care
If you are a single applicant, the funds in your QIT will typically be disbursed to the facility administering your care. If you are married and your spouse is living at home, 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 may still need a QIT and you generally will not lose any of your income. Funds deposited into the QIT can be withdrawn to pay for necessary health and care expenses at home or in an assisted living facility, depending on your situation.
4. 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 often required to create a QIT should the Medicaid applicant become incapacitated.
In many cases, a spouse can create a QIT without a durable power of attorney. If there is no spouse and the Medicaid applicant is incapacitated, the power of attorney must specifically authorize the agent to create the trust. This authority is sometimes referred to as a “super-power” and is typically separately initialed. Without it, the agent may lack the legal authority to establish the trust, and a more restrictive alternative such as guardianship may be required.
5. Income Must Be Deposited Properly
Medicaid applicants can choose to deposit at least the minimum amount of income required (the amount exceeding the income cap). Some choose to deposit slightly more than what is strictly necessary. However, it is crucial to count gross income.
The Social Security amount deposited into your bank account is not the full income amount because Medicare premiums are typically deducted automatically. Some pensions also deduct amounts for fees, life insurance, health insurance, or other expenses. These amounts must be added back to calculate gross income rather than net income. Only income should go into a QIT—not assets.
6. Upon Death, Funds in the QIT May Be Paid to the State
Upon the Medicaid recipient’s death, any remaining amounts in the QIT will likely be returned to the state for Medicaid reimbursement. Any funds that remain after reimbursement may be paid to other trust beneficiaries.
For this reason, you should view the QIT as a “pass-through” account with minimal amounts remaining each month after paying the facility or approved expenses.
7. QITs Should Be Established by an Experienced Elder Law Attorney
The process of setting up, funding, and administering a QIT can be complex, and one misstep can result in Medicaid ineligibility and loss of coverage. A QIT should be handled by an experienced elder law attorney who focuses on the needs of seniors including Medicaid planning.
If you need help establishing a Qualified Income Trust or planning for Medicaid eligibility, contact Burzynski Elder Law at 239-434-8557 to speak with an intake specialist.