Medicaid Qualifying Income Trusts

Medicaid Waiver Programs such as PASSPORT and ALF Waiver have income caps. Applicants with countable monthly income in excess of the cap ($2163 in 2014) do not qualify for the programs regardless of their needs. A Qualifying Income Trust (QIT) described under the Ohio Medicaid statutes may help high income individuals qualify for these programs.

The QIT is a relatively simple trust established to divert some of the applicant’s monthly income into the hands of the Trustee (usually a family member). The diverted income is not counted in determining the individual’s eligibility for Medical Assistance allowing him to qualify for the Medicaid Waiver Program. Once the individual qualifies for the program, however, the income diverted to the QIT as well as interest generated by the QIT assets are considered in establishing patient liability or spenddown. Assets that have accumulated in the trust in the months prior to Medicaid qualification, however, are considered exempt resources.

QIT Rules:

• The trust can be funded only with the individual’s pension, social security, and/or other income including interest earned by the trust in the month the income is earned.
• No resources may be used to establish or add to the trust.
• The individual cannot assign or transfer his right to receive income to the trust.
• The income cannot be paid directly to the trust. The individual must first receive the income and then transfer it to the QIT.

Uses of The QIT:

The main purpose of the QIT is to qualify the high income applicant for a Medicaid Waiver program that has an income cap. This can be done in the month that qualification is desired. If used in this way, the trust is often of little use after Medicaid qualification. It can be abandoned after qualification since diverted income will then be counted in patient liability and spenddown calculations.

With advance planning, however, the QIT can be used to protect funds for the applicant’s future needs. If the QIT is established in advance of the Medicaid application, income can be deposited into the QIT while the applicant’s resources are being spent down. At the end of each month “income” that is not spent becomes “resources.” Resources that accumulate in the QIT are considered exempt for Medicaid purposes.

Example: John qualifies medically for PASSPORT, the home Waiver program, but his income of $2700 monthly and his resources of $50,000 are both too high to qualify. John needs to spend his resources down to $1500 to qualify. He does this by paying for household repairs and home health care services for 6 months. During those 6 months, he deposits $2000 of his monthly income into a QIT. When he applies for PASSPORT in month 7, the income for that month will be excluded for qualification purposes, but included in calculating his monthly spend down amount. The $12,000 that has accumulated in the QIT over the prior 6 months will be considered exempt resources.

Definitions:

Income: assets received on a regular basis such as earned income, interest and dividend, pensions, Social Security and other benefits.
Resources: assets accumulated by the applicant such as savings, real estate, and investments
Spenddown/Patient Liability: amounts the Medicaid recipient is required to pay toward his medical expenses monthly.

The QIT is one of many strategies that can be used to qualify for Medicaid. If you or a loved one are concerned about how to pay for long term care or need a QIT to qualify for a waiver program, consult a knowledgeable Elder Law attorney.

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