Eligibility for Long-Term Care Medicaid generally has an income test and an asset test. If the income or the assets exceed the applicable limits, then the Medicaid applicant will not be eligible for Medicaid. The specific numbers for eligibility change every year - we post the applicable numbers on our Florida long-term care Medicaid page. When a Medicaid applicant's gross income exceeds the applicable income cap ($2,349/month in 2020), the applicant will need a Qualified Income Trust in order to reduce the income levels to below the applicable limit. A qualifed income trust is a type of "first party" supplemental needs trust used in Florida long-term care Medicaid planning.
How is income calculated for Medicaid purposes?
Income for Medicaid purposes includes the applicant's gross income. This mostly includes the gross amount of the applicant's pension and Social Security. It is important to review the gross amount because the pension may have a deduction for taxes or for health insurance. Social Security's gross amount usually includes a deduction for the Medicare Part B premium of $144.60/month, or more depending on income level (2020). If the Medicaid applicant's gross income exceeds the cap by only $1.00, for instance, the applicant will not be eligible for long-term care Medicaid unless a QIT is established and properly funded for each month that Medicaid is needed.
Why is a Qualified Income Trust (QIT) needed?
Long story short, it's Florida law. The reality is that needing a QIT does not make sense. A nursing home in Pinellas County generally costs between $9,000 to $11,000 per month, but if the applicant's income is only $2,500 per month (as an example) and their assets are below $2,000, how can they now afford to stay in the nursing home? Of course not - but Medicaid will still declare them above the income limit. But regardless of whether the law makes sense, Florida is one of the 18 states that have an income cap for long-term care purposes.
Who can set a QIT up?
First, a Medicaid applicant is likely to need an attorney to help set up a QIT. There are a lot of ways that income can create problems, so going to a good elder law attorney is important.
Next, the law provides that these are the following people who can established a QIT:
- The applicant themselves
- The applicant's spouse
- A court or guardian
- The applicant's attorney-in-fact (with a valid durable power of attorney)
Are there any potential pitfalls?
One of the largest pitfalls for QITs (and with almost all Medicaid planning, asset protection planning and estate planning) is that your durable power attorney should have the power to create a QIT. If a durable power of attorney is created after Oct. 1, 2011, then the document must be initialed in the right place. This is very important, to say the least. Almost every day we see poorly created created powers of attorney that do not have the power to create a QIT!
How is a QIT administered?
Very, very carefully. Every month long-term Medicaid is needed, then the QIT must be correctly funded. Money placed into the QIT is a dollar for dollar set-off. The following example illustrates how a QIT is funded:
Mary, a single person, needs nursing home Medicaid for January. Her countable assets are below $2,000. Mary's gross income is $2,500 per month (i.e., only over the income cap by $150). In order to create Medicaid eligibility for January, Mary (or her attorney-in-fact) needs to deposit at least $151/month into the QIT's bank account in January. Because the $151 was placed into the QIT, Mary's income is now (somewhat magically) below $2,349/month. We would always advise placing more than enough income into the QIT, not just this bare minimum. Here, we would likely advise putting $500/month into the QIT, just to be safe.
If Medicaid is needed for February (which is highly likely, unless Mary does not need Medicaid), Mary must, once again, deposit the applicable amount into the QIT, each and every month.
What happens to the funds place into the QIT?
Generally, the income placed into the QIT is paid out in a number of different ways:
- For a single applicant, all of his or her income must be paid to the facility as part of his or her patient's responsibility.
- For a married person with a spouse at home, some of the income from the QIT may be diverted to the community spouse, depending upon the community spouse's income. Another webpage has a long explanation of Florida spousal income diversion rules.
Wait, you mean that the money placed into the QIT may still go to the nursing home?
Yes. The income placed into the QIT will still go to the nursing home for a single person, so the reality is that the QIT is likely just a necessary annoyance for the entire family in order to keep and maintain Medicaid. The income rules for a married couple differ somewhat.
What happens to QIT assets upon the applicant's death?
Any remaining assets in the QIT are paid to the state of Florida. A QIT is a "payback" trust for Medicaid purposes. There is likely, however, very few assets in the QIT as most assets flow out during the month, regardless.
Is there any way around needing a QIT?
Not really. If an applicant wants long-term Medicaid in Florida and the income exceeds the cap, a QIT will be necessary. If the applicant has a pooled trust, however, the income may be placed into it instead, but this must also be done on a monthly basis if you want to have Medicaid.
Can we use a QIT for Other Medicaid Benefits?
QITs can only be used to legally lower the income for people applying for long-term care Medicaid. QITs do not help people applying for supplemental security income (SSI), so they basically only help people needing long-term care.
Applying for and getting Medicaid in Florida is not easy, and keeping Medicaid is not always easy either. That is why you should consult with a good elder law attorney as part of your estate and incapacity planning, or if your loved one needs long-term nursing home Medicaid in Florida.
Can Our Law Firm Help?
Yes! If your elder is a Florida resident and needs long-term Medicaid, we can help, regardless of where you or the elder is located. We have done thousands of successful Medicaid applications and we would be glad to help you and your family in this likely difficult time.