Use of the Qualifying Income Trust (QIT) for Medicaid Applicants – Holly Homra

Holly M. Homra, Attorney Lawyer, Paducah, Kentucky Holly M. Homra
Denton Law Firm
555 Jefferson Street
Suite 301
Paducah, Kentucky 42001

Effective use of the Qualifying Income Trust for Medicaid Applicants

Many people are aware of the resource limits imposed for Medicaid qualification and the importance of planning ahead to ensure these limits are met, but how does an applicant’s monthly income factor into Medicaid qualification?

In Kentucky, the income limit for a single individual to qualify for Medicaid long-term care assistance is $2,313.00, while the average cost of long-term care in Kentucky is over $6,000.00 per month. When it comes time to apply for Medicaid, many individuals find themselves over the income limit, but still unable to afford the high cost of long-term care. This is where the Qualifying Income Trust comes into play.

A Qualifying Income Trust (QIT) is a trust specifically designed to hold that amount of a Medicaid recipient’s income that is over the $2,313.00 monthly limit. By meeting a few key requirements, a recipient can qualify for Medicaid without completely giving up his or her excess income. To be used effectively, a QIT must be irrevocable and must name a Trustee other than the Medicaid recipient. Additionally, all income exceeding the monthly limit must be put into the trust in the same month that it is received. If all of these requirements are met, QIT funds are not counted towards the recipient’s income threshold and are instead held in trust for the recipient’s benefit.

While QITs are a necessary planning tool, there are limitations on how QIT funds can be used. Approved expenditures include payment of the recipient’s patient liability amount for nursing home care, his or her monthly personal needs allowance, any Medicare premiums due, and any medical costs which are not covered by Medicare or Medicaid such as dentures, eyeglasses, and other medical services. Additionally, if the recipient has a spouse who is not in nursing home care, a monthly allowance can be paid to that spouse. It is crucial to stay within these boundaries of allowed expenditures. If trust funds are used for purchases or payments other than those allowed, the amount spent could be counted towards the recipient’s income for that month and could result in the implementation of a penalty period requiring private-pay of nursing home costs.

Notably, upon the death of the Medicaid recipient, all funds left in the QIT must be paid to the state, up to the amount of total Medicaid paid on the recipient’s behalf. This factor, along with the spending limitations mentioned above, are important considerations when setting up a QIT.

A Qualifying Income Trust is an essential tool when applying for Medicaid. If you or a loved one need assistance setting up a Qualifying Income Trust, please contact Holly Homra at 270-450-8253.

This article is designed to provide general information prepared by the professionals at Denton Law Firm in regard to the subject matter covered. It is provided with the understanding that the author is not engaged in rendering legal, accounting, or other professional service. Although prepared by professionals, these materials should not be utilized as a substitute for professional service in specific situations. If legal advice or other expert assistance is required, the service of a professional should be sought.