How Qualified Income Trusts Unlock Medicaid Benefits: A Comprehensive Guide - Part 2

How do I set up a QIT?

1. Contact the experienced attorneys at NJ Elder Law Center at Goldberg Law Group for a free consultation. As one can see from the above list of guidelines, establishing a QIT requires careful attention to detail. That is why it's critical to work directly with an attorney specializing in Medicaid Planning and Elder Law to navigate the complexities and ensure adherence to all necessary procedures.

2. Draft a trust agreement with your attorney. The trust agreement will outline the terms and conditions of the QIT, including the appointment of the trustee(s) who will oversee and manage the trust.

3. Open a QIT bank account. After finalizing the trust agreement, the next step involves opening a separate bank account in the name of the trust. This account will serve as the platform for receiving and distributing funds in accordance with the terms outlined in the QIT.

4. Deposit excess income. After the trust account is established, the trustee must deposit any surplus income into it every month. Doing so will reduce your countable income to meet the Medicaid eligibility threshold, allowing you to qualify for benefits. 

5. Complete and submit the Medicaid application. This involves submitting all required documentation, including your QIT agreement, to the local Medicaid office. As a side note, many documents are required to be filed in a Medicaid application, including the last five years of complete financial records. This can be an overwhelming task for applicants and their loved ones. NJ Elder Law Center at Goldberg Law Group is highly experienced in helping applicants qualify for assistance from Medicaid while still protecting their assets. We can work with you to make your money go further and help maintain your quality of life.

How do I empty the QIT for Assisted Living, Nursing Homes, or At-Home Care?

It's imperative to acknowledge that the income cannot be redirected to a facility rather than to the trust every month even though that is where the income will end up anyway. The excess income must be deposited into the QIT bank account every month and then the cost share is paid to the facility. Otherwise, the money will be counted toward the income cap of the applicant, possibly making them ineligible for Medicaid. 

The cost share is the amount the applicant is responsible for paying monthly to the assisted living facility, nursing home, or caregivers. Cost share refers to the portion of medical expenses that Medicaid recipients are responsible for paying out of their own pocket. The amount of the cost share varies depending on factors such as income level and the specific Medicaid program in which the individual is enrolled.

It is the trustee’s responsibility to make payments from the QIT to cover qualified expenses for the beneficiary's care. These expenses may include monthly fees for assisted living facilities, nursing homes, or payments to caregivers providing at-home care services. Normally, all deposited income is spent each month, so there is usually a zero or minimal balance in the QIT bank account at the end of every month. To ensure compliance with the convoluted Medicaid rules, consider consulting with the professionals at NJ Elder Law Center at Goldberg Law Group. We can provide valuable assistance in navigating the complexities of Medicaid planning and administration.

What happens when the Medicaid recipient passes away?

If there are any leftover funds in the QIT, a commission is paid to the trustee after post-eligibility expenses are paid, including cost share. Upon the Medicaid recipient’s death, the balance of the QIT is paid to the Division of Medical Assistance & Health Services (DMAHS), as the State of New Jersey is the primary beneficiary of any remaining funds. The trustee will manage the process, which also includes contacting the County Welfare Agency and providing necessary documents. 

For more information, the DMAHS has published a QIT FAQ that can be found at the below link: 

https://www.nj.gov/humanservices/dmahs/clients/QIT_FAQs.pdf