The QIT requirements in New Jersey are a minefield – tread carefully!

The Medicaid program that pays for long-term services and supports (MLTSS) for nursing home care, assisted living and home care services is available for applicants whose income is less than the cost of care, as long as their resources (assets) don’t exceed the prescribed limits. We still hear from clients that they’ve been told that “you can never apply for Medicaid because your income is too high,” even though the income is well below the cost of that nursing home. That false information has led people down the wrong path more times than I care to count. The fact is that since 2014, if the person’s monthly income exceeds a certain limit ($2,313 in 2019), s/he can still apply for NJ MLTSS-Medicaid, but the procedure for turning over the monthly income is different (and more complicated) than it is for the basic “categorically needy” Medicaid program. A specific kind of income trust has to be set up by the applicant. It’s called a QIT – Qualified Income Trust. The Trust has to be established before the Medicaid application is filed.

Each month, the entire amount of an income source that makes the income exceed the “income cap” must be deposited into the QIT. Often the applicant will decide to just transfer all income each month into the QIT. From there, the Trustee has to disburse it in a particular way: for the Personal Needs Allowance (PNA); health care premiums; support of spouse if applicable; certain other authorized deductions; and the cost-share payment. Home care participants must turn over the excess income to the State of NJ – they don’t get to use it to pay for their care. Nursing home residents must turn over the excess to the nursing home. QIT Template      QIT_FAQs

So why is this a minefield? Every week we learn of things that went wrong for our clients in the handling of these QITs, leading to denials of applications. Now, I have been told by certain Medicaid supervisors that the applicant should inform the caseworker if they encounter a problem with a QIT (such as “the income didn’t arrive this month”) or should amend the Trust to solve a problem, but there might be many weeks if not months before the applicant even knows who’s handling the application or knows that a problem with the QIT exists. If the repair occurs, there’s no assurance that it will apply retroactively to the time of the application, leaving the nursing home resident and their spouse exposed to staggering unpaid nursing home bills. The mechanism tor report a problem to a caseworker isn’t always known, and it’s frankly unclear that a caseworker even has authority to accept a post-facto revision to a QIT.Further, I have been advised by certain county representatives that there is no obligation on the County Board to alert the applicant that they have spotted a problem with the QIT funding that should be corrected; the applicant may not realize it until months down the road when a Denial of benefits is received.

So, forewarned is forearmed.   Here’s a list of things that regularly occur and regularly cause problems in the application process.  To try to avoid these problems, anyone handling the income of an MLTSS Medicaid applicant needs to be exquisitely familiar with the intricate requirements of the QIT policies, and needs to be extra-vigilant to make sure they are doing it all “by the book.”

#1 The QIT information published by the State never specified whether the net or the gross income amount should be written on the QIT trust document, but if the trust document lists the gross amount of the income rather than the net, the amount of income being deposited into the QIT (the net) won’t match the trust document, and the applicant may be told that the QIT was “incorrectly funded.”

#2 If the income arrived in the checking account late in the month and couldn’t be transferred into the QIT until the following month, the QIT could be “incorrectly funded.”

#3 If income doesn’t arrive at all in a certain month due to an administrative snafu with the payor, the QIT could be “incorrectly funded” or “underfunded.”

#4 If the trustee of the QIT fails to disburse all of the income in the month of receipt, there could be an excess balance sitting in the QIT on the first day of the next month, which could lead to a Denial for failure to handle the QIT properly.

#5 If the Trustee uses the QIT for impermissible expenditures, the QIT may be regarded as invalid.

#6 Some applicants think that they can keep up to $2,000 in the QIT because there is a $2,000 resource limit for MLTSS. This is not correct. The QIT has a specific purpose – handling the income. It isn’t the general discretionary resource which the applicant may retain and enjoy.

#7 The Power of Attorney document might not authorize the Agent to establish any kind of trust, no less a QIT. If the applicant is incapacitated, it may be impossible to establish the QIT without getting a court order, which could take months. This creates a problem in the application process and a request for a hardship waiver needs to be made.

#8 The Judgment appointing a Guardian may not include anything authorizing the Guardian to establish a trust. As with the Power of Attorney problem, it will be impossible to set up the QIT without filing an emergency court petition. Again, this creates a problem in the application process and a request for a hardship waiver needs to be made.

#9  As noted, the excess income above $2,313 has to be turned over to the State as a cost-share by a home care MLTSS recipient. While the application is pending, this money has to just accumulate. There is concern about whether this creates a risk of having excess-resources.

#10 The income is deposited into the applicant’s bank account before it is transferred into the QIT, and auto-debits for insurance premiums are automatically taken out of that account because the applicant hasn’t yet switched them over to the QIT. The person handling the income for the applicant therefore transfers less than the full amount of the income into the QIT, since the insurance premium was already taken out it “those funds” from the other account. The deposit to the QIT therefore doesn’t match what’s written on the trust document. This situation has to be carefully explained in the application,  because if the wrong amount of dollars is transferred into the QIT for dispersal, the QIT may be deemed “incorrectly funded,” leading to the problems discussed above.

Forewarned is forearmed! Preparation of a Medicaid Eligibility Plan is complicated, with many moving parts, and is not just a matter of collecting and submitting a pile of records. Take care to get advice  so as to avoid the minefields when entering the battlefield of MLTSS applications.

Call us for asset preservation strategies and Medicaid applications & appeals …. 732-382-6070

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

There’s no “income cap” anymore for Medicaid long term benefits

When I first started filing Medicaid applications for my clients back in 1995, a person who needed long-term care services in the home or assisted living but had run out of money could not even apply for Medicaid if their gross monthly income was higher than the “income cap.” Of course, the income cap was well below the amount that was needed to pay for care, which meant that a lot of people couldn’t receive necessary services. Basically it meant that many people who would have done well in a community environment with a home health aide and other support ended up moving into a nursing home, because that was the only setting where Medicaid would pay for them. Or they had to do without care or cobble together a plan in which family members took care of them.

Finally, in 2014 when the State’s Comprehensive Medicaid Waiver went into effect, the income cap was eliminated as a bar to receipt of community & assisted living services. There is a special procedure that the applicant has to use, because the income has to be funneled through a structure called a Qualified Income Trust (QIT), but at least the person can now apply for Medicaid benefits. You can read more about QIT’s in our earlier blogs.

We continue to meet people who haven’t heard this good news. If your family is struggling with how to arrange and pay for long term care, call us for legal advice regarding Medicaid eligibility that fits your specific situation.

For personalized advice about a Medicaid plan call … 732-382-6070

For Qualified Income Trusts, Not All Bank Accounts Are Created Equal

Medicaid Long Term Services and Supports (MLTSS) in New Jersey pays for nursing home care for people with alzheimers disease, catastrophic disabilities and other serious difficulties with self care. The program requires any applicant with more than $2205 (three times the SSI amount–new for 2017) of gross income to make a Qualified Income Trust.  Our office assists applicants with this process all the time.  After the Trust document is completed, we usually send the trustee to the applicant’s bank to set up a QIT bank account.  But things can get hairy here.  Most people, reasonably, want to open bank accounts that avoid fees and penalties.  However, QIT accounts are not most accounts.  They are for the applicant’s gross regular monthly income ONLY, and the income is supposed to go into the account and leave the account every month.  Medicaid allows up to $20 per month in fees as a deduction from the applicant’s income; trustees should therefore pick the checking account product with reasonable fees but no minimum deposit.  If the account is set up with $0 in it, even if that costs a little money, that’s good; the assigned income will go in and fund the trust account in the month of the application date sought–this is what caseworkers are looking for initially.  Some banks will waive even these costs if you show proof of a regular direct deposit.

Unfortunately, many applicants’ Medicaid eligibility has been tripped up by technical processes related to Qualified Income Trusts since they began in December of 2014.  To do better, we all need to up our game and learn exactly what the caseworkers want before they ask.  Come talk to us about this and your other Medicaid questions.  We’re here to help.

Call us for Medicaid applications and senior care planning … 732-382-6070

Going from ACA Medicaid to “Regular” Medicaid Can Be a High Wire Act Without Legal Assistance

New Jersey has a lot of roads to eligibility for Medicaid, and that’s a good thing.  All of those roads are called NJ FamilyCare, and that’s a confusing thing.

Medicaid in New Jersey is provided by five Managed Care Organizations (MCO) now through NJ FamilyCare.  You must choose one to get services, including long-term services and supports (LTSS), which will be coordinated by the MCO care manager.

If you began to receive Medicaid/NJ FamilyCare benefits because you were income- eligible and without other creditable health coverage (in other words, you receive Medicaid through the Obamacare Medicaid expansion), you could lose your Medicaid coverage if you have a change in your modified adjusted gross income (MAGI) or you obtain other coverage (like Medicare). Unless you are eligible for Medicaid through another pathway (called Aged, Blind or Disabled, or ABD) you will lose services.

For example, if a person with limited income and no insurance had an unexpected illness and spent time in the hospital, it is likely that the hospital got the person on Medicaid through Obamacare, enrolled the person in an MCO, treated that person, and then discharged that person to a rehabilitation facility, where long-term care would also be covered.  However, if there is a later increase in income which would allow that person to purchase subsidized insurance, Medicaid will be discontinued and there will no longer be a payor for the nursing facility or other long-term care setting.  Hence, the need to scramble for ABD, which can co-exist with other insurance coverage.

Planning for ABD Medicaid could include:  spending down resources, establishing a Qualified Income Trust for income, establishing a Special Needs Trust for assets, or other planning that could involve a spouse or disabled or minor child.  In the case of a special needs trust, this type of planning must be done before your 65th birthday.

New Jersey’s Medicaid expansion benefit package does include, via federal waiver, MLTSS–so you must always think about how your eligibility category might change and how to maintain the benefits you currently have.  It can be a very difficult process, but we can help–call us at 732-382-6070.