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The Qualified Income Trust

Key hole that reads trust

The Problem

Florida imposes an income cap for eligibility for the Medicaid institutional care (long term custodial nursing home care) program. The income gap is three times the SSI limit.

The income cap is currently $2,205 per month. Since the private pay costs for nursing home benefits in Florida average much more then that per month according to the Agency for Health Care Administration of the State of Florida, having an income of any amount less than the cost of care deprives one in need of custodial nursing home care of that essential care.

Congressional Response

Rather than eliminate income as a factor in determining eligibility, Congress provided a convoluted solution for someone over the income cap. A Medicaid applicant may create a “Qualified Income Trust”. All monthly income in excess of the monthly income cap is placed in the trust and the fiction is that the income does not therefore exceed the cap. The excess income placed in the trust remains in the trust until the Medicaid recipient’s death, when it is paid to the State as reimbursement for Medicaid funds paid by the State on behalf of the Medicaid recipient during his or her life.

State Recovery

Upon the death of the beneficiary, the State must receive reimbursement from the funds remaining in the trust for all Medicaid assistance paid on behalf of the beneficiary under the State Medicaid program. The state can purchase this assistance at a huge discount form the private pay rate, therefore, even though the beneficiaries estate must reimburse the state for the amount spent, the amount spent will be dramatically less than if the beneficiary had paid privately, out of pocket.

Managing the Qualified Income Trust

The checking account must not earn or pay interest. The amount transferred each month should also be equal to the gross monthly income of the applicant for that month. This advice is to keep things easy and safe and reduces the chance of a possible insufficient funding of the trust for any given month Medicaid coverage is needed. Another trap to avoid is where the monthly income fluctuates or infrequent additional income is paid.

To learn more about this subject and the other eligibility requirements for Medicaid, please contact our office.

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