In Florida, the average annual cost of a long-term facility now tops $100,000. If you are a middle class person who needs long-term nursing care and you do not have long-term care insurance, the expense will quickly erode your savings.
Securing Florida Medicaid benefits may be the only way an applicant can avoid impoverishment – provided all the eligibility requirements can be met. One of the eligibility criteria is income. To qualify, you cannot have more than $2,901 in monthly income (as of January 1, 2025). However, even if your income exceeds the cap, there may be a solution: Establishing a Florida Medicaid Qualified Income Trust (QIT), also known as a Miller Trust. Read on to learn how this legal instrument can help you preserve your assets.
How Is Excess Income Calculated?
Sources of a Medicaid applicant’s income include but are not limited to:
- Social Security, including all Medicare deductions
- Alimony
- Disbursements from retirement accounts
- Pension
- Net rental income (gross income, less expenses)
- Annuity payments (both return of principal and interest)
Note that it gross income, not net, that is considered when Medicaid calculates income. For example, if your Social Security monthly payment is $3,500 but $200 is deducted from that for Medicare Part B, the gross Social Security income is still considered to be $3,500.
Who Creates The QIT?
If the total from all income sources exceeds the $2,901 income cap per month, a QIT may be created by one of the following:
- The applicant, assuming he/she is competent.
- The applicant’s spouse.
- The applicant’s agent under the applicant’s Durable Power of Attorney, but ONLY if the document grants that power to the agent and has been initialed by the applicant. This is one of many reasons that your Durable Power of Attorney should always be drafted by an experienced elder law attorney. The attorney will know the various powers that can be given to your agent, and will be able to incorporate the precise, necessary language into the document. If the agent of an incapacitated applicant is not authorized to create a QIT, the only remaining option is to petition the court to give the agent that authority. Obviously this process takes time. While the petition is in progress, the family will have to keep paying the facility out of pocket, and pay additional legal fees, too.
How Is The QIT Structured?
- The trust grantor is the applicant.
- The Medicaid recipient is the beneficiary for the duration of his/her life.
- Medicaid must be named as the primary beneficiary, meaning that any funds that remain in the trust when the Medicaid beneficiary passes away will go to Medicaid, up to the amount necessary to reimburse Medicaid for what it expended on the recipient. However, in reality, there is usually little or nothing left in the QIT once the beneficiary passes away.
- The trustee for the QIT is usually the spouse, another relative, or a trustworthy friend. If none of these individuals is available, a professional trustee may be retained, for a fee.
- Once the QIT is established, a checking account is created naming the QIT as the owner of the account. The Medicaid applicant’s income over the income cap must be deposited into the account. In practice, it is usually easiest to just direct all of the income into that account.
How Are Distributions Made From The QIT?
The trustee may distribute funds only for the following purposes:
- The Medicaid recipient is entitled to a Personal Needs Allowance (currently $160 per month) for personal items such as toiletries, haircuts, magazines, etc.
- If the spouse of the Medicaid recipient has an income that falls below the Minimum Monthly Maintenance Needs Allowance ($2,555.00 as of 7/1/2024), a portion of the applicant’s income can be diverted to the spouse to bring his/her income up to that level. There are ways to increase that amount. (There is no cap on the spouse’s income.)
- The patient’s responsibility is paid to the nursing home.
- If there are residual funds in the trust each month, payments may be made for medical-related expenses that are not covered by Medicaid or Medicare. Usually that does not occur if the applicant is in a nursing home. However, it can occur if the applicant is receiving home care Medicaid, when the applicant has no patient responsibility to the nursing home.
- Ultimately, any money that remains in the trust must be paid to Medicaid for reimbursement.
The Qualified Income Trust can help an applicant who has too much income to secure Medicaid benefits. However, there are other areas Medicaid examines when determining eligibility, including an applicant’s asset level and five-year history of gifts. Even if you or your loved one do not appear to meet all the requirements, it’s not necessarily a dealbreaker: There are above-board legal techniques that may be able to overcome other obstacles, too. An experienced elder law attorney can guide you. Contact The Karp Law Firm at 561-625-1100 if you or a loved one is seeking Medicaid benefits for long-term care.
