Qualified Income Trust

A large proportion of the population aged 65 and older will need to be placed in long-term care at some point in their lives, despite its prohibitive cost. The monthly average cost of a private home care unit in the United States is $8,121, a number that is far outside of many people’s budgets. Because long-term care is a necessity for many people, you may believe Medicaid should cover this expense. However, if your monthly income surpasses the government’s limits, you may have to establish a qualified income trust (QIT) in order to qualify for Medicaid benefits.

What Is A Qualified Income Trust?

A qualified income trust (QIT) is also commonly referred to as a Miller Trust. A QIT is created in order to legally transfer any earnings that exceed Medicaid’s limits into an irrevocable trust. Medicaid does not consider the wages that are diverted to the QIT when assessing entitlements for Medicaid-sponsored institutional care or Home- and Community-Based Services (HCBS). A QIT lowers your earnings to below the maximum income threshold, enabling you to access Medicaid benefits to pay for long-term nursing home care.

How Does A Qualified Income Trust Work?

In order to open a QIT, you must select a trustee to manage the trust, and you must name the state you live in as the trust’s beneficiary. This is because the state will recoup all or part of the money it paid for your Medicaid-sponsored care from your trust after you pass away.

Once you have established your QIT, your monthly income will be used to pay for your Medicaid benefits, and any remaining income that month will be diverted into the trust. You will not be permitted to utilize any money in the trust outside of your personal needs allowance and money used to pay for medical expenses, such as your Medicare premium.

Who Could Benefit From A Qualified Income Trust?

Medicare does not cover long-term care; only Medicaid does. Each state has a different earnings threshold for Medicaid recipients. Medicaid spend-down is available in certain regions, including North Carolina, allowing applicants to deduct medical or long-term care costs from their earnings, which are then tallied toward the standard approval maximum.

Individuals with wages above the maximum threshold but who cannot afford long-term care on that income may struggle to afford their treatment in areas without a Medicaid spend-down program. These individuals would benefit from a QIT.

However, a QIT cannot be used for assets that exceed the Medicaid maximum limit. An experienced Medicaid planning lawyer can assist you in determining whether a spend-down program could help you qualify for Medicaid-sponsored care.

Do I Need A Lawyer For A Qualified Income Trust?

It is hard to establish and operate a Miller Trust on your own. Banks may refrain from engaging, you may incorrectly set up your trust, there may be an inappropriate allocation of earnings, or the trustee may refuse to implement complicated requirements. Any of these pitfalls can make you ineligible for Medicaid. With many care facilities charging roughly $10,000 per month, even a minor error may be costly.

Establishing and appropriately financing or managing QIT is a complex undertaking, and you never want to jeopardize essential long-term care. You need a competent senior care lawyer who specializes in Medicaid plans to best execute your QIT. They will guide you through the process of forming a Miller Trust and guarantee that it is correctly implemented to ensure that you have the best chance of qualifying for Medicaid-sponsored long-term care.

When you work with an experienced estate planning attorney, you can rest easy knowing they have the expertise and skill to navigate through this complicated process. To learn if you may be eligible for Medicaid benefits via a spend-down program or QIT, call to schedule a free consultation.

Frequently Asked Questions

What Can A Miller Trust Pay For?

There are restrictions on using money in a QIT. A Miller Trust allows the Medicaid recipient and their spouse to each receive a small monthly stipend. As of 2022, in North Carolina, an applicant’s personal needs allowance is $30 per month. It can also be used to pay for medical expenses, such as Medicare premiums. It cannot be used for any other expenses.

Does A Qualified Income Trust Need An Ein?

No. The IRS makes an exception for Miller Trusts. Instead of an Employer Identification Number (EIN), the social security number (SSN) of the grantor is used.

What Is The Maximum Income To Qualify For Medicaid In North Carolina?

In North Carolina, individuals who get SSI are already eligible for Medicaid long-term care. If you are not receiving SSI, the North Carolina Medicaid income and asset limits as of 2022 are as follows:

  • If you are applying for institutional/nursing home care, your income must be less than the amount that Medicaid will be paying for your care. For example, if your care facility will cost Medicaid $6,000 per month and you earn $4,000 per month, you will qualify. There is not a standardized income maximum, regardless of marital status. There are, however, standardized limits on your assets.
    If you are single, your assets cannot exceed $2,000.
    If you are married and both spouses are applying for benefits, your assets cannot exceed $3,000.
    If you are married but only one spouse needs benefits, the applying spouse has an asset limit of $2,000 while the other spouse has an asset limit of $137,400.
  • If you are applying for Medicaid waivers or HCBS, your income must be less than $1,074 per month if you are single or married but applying on your own. If you are married and your spouse is also applying for benefits, your combined income cannot exceed $1,452. The asset limits for Medicaid waivers and HCBS are the same as the above values for institutional care.
  • If you are applying for regular Medicaid and you are elderly, blind, or disabled, the income limit is $1,074 per month with an asset limit of $2,000. For an applicant who is married, the income limit is $1,452 a month with an asset limit of $3,000, regardless of whether both spouses are applying for Medicaid benefits.