If you are contemplating the need for long-term care, you know how expensive it can be to pay for. Medicare does not pay for long-term care, but Medicaid may be available to help with these expenses. Unfortunately, to become eligible for Medicaid assistance, you must have assets and income below certain levels.
What is an Ohio resident to do if their income exceeds the amount allowable by Medicaid? Fortunately, as of August 2016, a tool known as a Qualified Income Trust (QIT) may be the answer.
A Qualified Income Trust, also known as a qualifying income trust or Miller trust, is a trust that can be established for an individual's income that exceeds the amount permitted by Medicaid. Placing excess income in a QIT allows the Ohio Department of Medicaid to avoid counting that income toward a person's Medicaid eligibility. If you are in a nursing home or long-term care facility, a QIT helps you avoid jeopardizing needed government benefits. In Ohio as of July, 2017, the monthly income limit for Medicaid eligibility is $2205.
Once you place income into a QIT, it can be used only for designated purposes. The trust can be used to pay medical expenses, a small allowance for personal needs, and bank fees. The remainder must be used to contribute toward your share of the cost of your care. If there is any money left in the QIT at the time of your death, it must be used to reimburse Medicaid for at least part of the cost of your care.
Funds in a QIT may be used to pay for nursing home care, but also for other types of long-term care. These include intermediate care facilities for people with intellectual disabilities, assisted living, and community- or home-based services such as Ohio Home Care or Ohio's PASSPORT Medicaid waiver program, which helps older Ohio residents stay in their home by connecting them with needed services and support.
Unsurprisingly, the Ohio Department of Medicaid has fairly stringent requirements for a QIT. First and foremost, the trust must be irrevocable, meaning you can't create it, place income in it in order to qualify for Medicaid, then later shut the trust down and take your money back.
The State of Ohio must be named as beneficiary of the trust, which is what allows the state to recover from the trust an amount up to the total amount of Medicaid payments made on behalf of the creator of the trust.
Lastly, the trust may be funded only with the income of the individual who benefits (by continued Medicaid eligibility) from the trust. It may not be funded with a spouse's income or with other assets owned by the long-term care recipient.
Like all trusts, a QIT will not be effective for its intended purpose if it is not prepared, executed, and funded properly. It is wise to invest in the services of an experienced Ohio estate planning attorney to make sure your QIT is properly drafted and protects your benefits.
Also, remember that a QIT does not protect assets other than your income from needing to be "spent down" in order to qualify for Medicaid. There are a variety of things you may be able to do to legally protect other assets for your spouse and family without jeopardizing your Medicaid eligibility, and a knowledgeable elder law and estate planning attorney can help you achieve these goals as well.
You may also be interested in: