Please! Set up that QIT before filing the Medicaid application!

“What on earth is a QIT?” Under the New Jersey Medicaid program, there are some extra hoops to jump through when the applicant’s gross monthly income from all sources exceeds $2,205.00. This number is colloquially referred to as the “income cap,” and up until late 2014, it created a hard barrier to eligibility for home and community-based Medicaid services for higher-income applicants, and it placed recipients into the “Medically Needy” nursing home Medicaid program. The general rule with Medicaid is that the applicant must turn over all of their income to the nursing home except for specific authorized deductions, such as a Personal Needs Allowance (recently raised to $50/month), health insurance premiums and support of the community spouse. Simple enough. For the higher-income individuals, however, they must funnel the income through a Qualified Income Trust or QIT.

I’ve written about this process before. The QIT is an irrevocable income trust for sole benefit of the Medicaid applicant, and the State is the first remainder beneficiary at death of the Medicaid recipient. The State published a template as well as an instruction sheet for the helpful family member and the bank, to help everyone understand how to set it up. So what’s the problem? The problem is that when a Medicaid application is filed at the County Board of Social Services, the applicant’s family member/ representative  might be told “don’t forget, you have to set up a QIT.” They may be given the State’s forms. They may not be told that it must be done immediately. What they aren’t given is step-by-step instructions on just what this “thing” is, how it has to be administered, and what the Trustee’s responsibilities are from month to month. It can be very difficult for the family member to reach the caseworker for follow-up. Despite the fact that state Medicaid regulations specifically require the local agencies to assist the applicants to secure eligibility, little help is provided on the QIT process. If that weren’t enough, some banks just don’t understand the process. In one of my recent cases, the branch manager of a major bank insisted that this trust could only be established through the corporate office — totally wrong advice. Sometimes, the family member just throws up their hands and walks away from it.

The big problem is that even if the individual is financially eligible to receive Medicaid benefits for his or her nursing home care, failure to set up the QIT will result in denial of Medicaid eligibility. This will have disastrous results for their spouse, who may be on the hook for tens of thousands of dollars in nursing home bills.

The QIT must be established no later than the month prior to the first day of the first month in which you want Medicaid eligibility for nursing home services. Then as soon as the income arrives, it can be funneled through the Trust and allocated as required.

Call for advice on establishing QITs and all other nursing home Medicaid issues … 732-382-6070

NJ Medicaid issues Guidance on new Qualified Income Trusts

I previously posted about the upcoming changes to the New Jersey Medicaid programs that pay for nursing home care and home and community-based services (HCBS) for people whose gross monthly income exceeds $2,163. This amount was formerly called the “income cap,” and people in that group could only receive Medicaid benefits in nursing homes. That was under the “Medically Needy” program. Going forward, the Medically Needy Program is being replaced for new applicants. Under MLTSS, the State will now require that the income be transferred into a Qualified Income Trust (QIT) which used to be colloquially referred to as a “Miller Trust.” The State has published some guidelines about the process on the DMAHS website.

Here at FRE-L, we are developing a process to help our clients set up and administer a QIT so that they can have it in place by the time the person’s assets have been reduced to the necessary level for Medicaid eligibility.   We  are ready to help you with every step of this process. We will provide detailed instructions and assistance to you.

If you are planning to file a Medicaid application for someone whose gross monthly income exceeds $2,163, you have to handle the income in a particular way so that it is funneled through the Trust every month before it is then disbursed for the expenditures that are allowed under the Medicaid program. Eligibility will be at risk if this isn’t done correctly. As of now, this structure will be required for all applications beginning 11-1-2014. It will likely take at least a month for you to get it all in place. First, the Trust must be prepared. Next, the bank account for the trust must be set up. Next, the arrangements to get the income into the trust each month must be implemented. Finally, you will establish the routine for the monthly disbursements from the trust.

Once the structure is in place, the trustee will be issuing several payments each month out of the trust: (1) Personal Needs Allowance for the applicant (currently $35 PNA); (2) support for the community spouse, if authorized, to fund their MMMNA or Minimum Monthly Maintenance Needs Allowance (MMMNA) in an amount that is calculated per the regulations or court order; (3) incurred medical expenses and (4) cost share for medical assistance.

Call us for legal advice and assistance with Medicaid applications and NJ Qualified Income Trusts  … 732-382-6070