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