If your income exceeds Medicaid’s limits in Florida, you can use a Qualified Income Trust to help establish your financial eligibility for long-term care benefits. Upon establishing a Qualified Income Trust, however, it is critical that the trustee understand how to maintain the funds and how to avoid complications throughout the lifetime of the Medicaid recipient.
This information is for general purposes only and should not be used as legal advice. Please contact a Florida Elder Law Attorney for specific legal advice.
What Are Qualified Income Trusts (QIT)?
Qualified Income Trusts (QITs) are a type of irrevocable trust designed to hold a Medicaid recipient’s income. They are also known as ‘Miller Trusts’.
QITs work by allowing the applicant’s excess income (the amount that goes over the Medicaid application income limits) to be placed into the trust and then used for allowable expenses.
The Medicaid recipient’s excess income should be deposited directly into the QIT each month, and the applicant will be allowed to use the funds on eligible expenses only, such as nursing bills, Medicare premiums, attorney fees, bank fees and CPA fees.
When Are QITs Needed?
QITs are helpful when a Medicaid applicant’s income exceeds their state’s Medicaid income cap.
In Florida, the income cap for nursing home applicants is $2,742 in 2023.
Any excess income must pass through a Qualified Income Trust to be eligible for Medicaid coverage.
View our guide to Florida Medicaid eligibility and income limits here.
How Do Qualified Income Trusts Work?
A Medicaid recipient’s income is deposited directly into the Qualified Income Trust each month. The trustee (person responsible for managing the trust’s funds) will then distribute the funds to pay for the recipient’s medical expenses and allowable deductions.
If, for example, your income is $3,000 then you would put at least $258 into a QIT to lower your countable income to meet the income cap. If advisable, you can also funnel all of your monthly income through the QIT.
Medicaid eligibility rules prohibit you from giving excess income to someone else while using a QIT. It also should not be used to hide excess resources or to make payments to the Community Spouse (i.e. Medicaid recipient’s spouse not on Medicaid).
Medicaid is the ‘primary’ beneficiary of the trust. The trustee is typically a relative or close, trusted friend who will write the checks for the trusts.
- Income is deposited into QIT.
- The trustee distributes the funds for ‘allowable expenditures’ such as:
- Personal Needs allowances
- Medical expenses
- Medicaid co-pay
- Monthly maintenance needs an allowance
- The remaining balance is sent to Medicaid upon the death of the beneficiary.
What Expenses Do QITs Cover?
Funds deposited into Qualified Income Trusts may only be used for allowable expenses.
- Medicaid recipients who deposit their entire income into the QIT may be paid a personal needs allowance (PNA). In 2023, a nursing home resident can receive $130/month of PNA.
- The funds of a QIT are used to pay for a share of the Medicaid recipient’s long-term care costs.
- Medical bills not paid for Medicaid and Medicare premiums are also allowable expenses.
Who is Involved in a Qualified Income Trust?
- Grantor: The individual who creates the trust, such as the Medicaid applicant or authorized representative.
- Trustee: The individual appointed to manage the QIT’s funds and distribute them each month. This is usually a close friend or family member.
- Lifetime Beneficiary: The Medicaid recipient.
- Primary Beneficiary: The Medicaid agency should receive the remaining funds upon the death of the lifetime beneficiary, up to the amount of Medicaid benefits paid out to the recipient.
- Secondary Beneficiary: After the Medicaid recipient passes and after Medicaid has received the necessary funds, then the secondary beneficiary should receive the remaining money. The Grantor can decide who they want this person to be.
How Can I Create a Qualified Income Trust in Florida?
To create a Qualified Income Trust (or Miller Trust) in Florida, it’s advised that you contact a Florida Elder Law attorney who will help you establish it by drafting and executing the appropriate trust documents and opening a trust checking account.
The trust checking account should use the recipient’s social security number as the grantor of the trust and typically be titled with the name of the trust itself, such as “Qualified Income Trust of X”.
Your Elder Law attorney will then send a copy of the properly executed trust document and the appropriate proof of income distribution arrangements to Medicaid.
You do not have to use an attorney. However, as Medicaid eligibility is complicated and any violation can result in a long penalty period, it’s highly advised. Mistakes are very easy to make in the Medicaid application process and can be extremely costly.
Read Related: Top Reasons Medicaid Applications Are Denied
Who Can Form a Qualified Income Trust?
Qualified Income Trusts can be set up by:
- The applicant
- The applicant’s spouse
- A court
- A guardian of the applicant
- The applicant’s attorney-in-fact, with a proper durable power of attorney.
Hire an Elder Law Attorney in Riverview
If you or a loved one needs assistance applying for Medicaid or has any questions, our Florida Medicaid planning lawyers can help. It’s advised that you take action sooner rather than later, as delaying can see you miss out on long-term care planning opportunities.
We can analyze your situation and determine if a Qualified Income Trust is right for you and your family, and then take the steps to establish one appropriately.
Battaglia, Ross, Dicus & McQuaid, P.A. is U.S. News and World Reports Tier 1 law firm in Florida, specializing in Estate Planning & Probate since 1958. With award-winning, experienced estate planning attorneys, they can help you plan for the future today.