Qualified Income Trusts Revisited (Part 2)
Last week I said I would share with you my experiences filing applications with Qualified Income Trusts (Miller Trusts) which are required when an applicant has income over Medicaid’s strict income cap ($2199 for 2015).
The rules are very technical. Income can’t be split. If I receive $1500 from Social Security and $1600 from a pension I can’t simply transfer $1000, the excess income over $2199, to the QIT each month. I must transfer one whole source of income to the trust. In other words, I can’t split any one source of income. The whole Social Security amount or the whole pension amount must be transferred.
In some counties there seemed to be confusion about which applications needed QITs and which didn’t. Filing an application for a Medicaid start date of November 1, 2014, before the regulations changed did not require a QIT, however, I had more than one caseworker tell me in January or April, 2015, when they were still reviewing our application that now a QIT was required. They were wrong.
Applications filed requesting Medicaid pickup dates before December 1, 2015 do not require a QIT. They are approved under New Jersey’s Medically Needy Medicaid program. Likewise, all previous Medically Needy Medicaid recipients remain on that program. However, if you lose Medicaid and have to reapply, since the “Med Needy” program no longer exists, the QIT would then be necessary.
I found that some counties were nitpicky about the language in my trust. They insisted on certain wording, even though what I had written said the same thing as what they asked for. Some counties insisted that the applicant’s date of birth appear in the trust agreement, others didn’t. Some caseworkers insisted that we couldn’t open a bank account for the trust with more than $20 even though most banks won’t do it for less than $100.
We also found that some banks had no idea what a QIT is and insisted on high minimum balances which won’t work with QITs. Income must go in each month and the same amount must come out each month leaving a low balance of $20 as required by New Jersey.
When to create the trust seemed to be an issue for some caseworkers. QITs should be created the month before Medicaid is to start or the first month of anticipated Medicaid eligibility. If you wait later than that Medicaid won’t be approved until the QIT has been established and used.
Finally, I want to address a misconception that many people have about QITs. They hear the word trust and they think the QIT can be used to protect assets from Medicaid’s spend down rules. The QIT is strictly a means to meet the income requirements. Income is simply “passed through” the trust on its way to the nursing home, or the community spouse or wherever the Medicaid recipient’s income must go under Medicaid’s post eligibility rules. No assets should be deposited.
For anyone who might be in need of a QIT contact our office for assistance.