Qualifying for Medicaid can be a confusing process, especially when you or your loved one need to find a way to pay for long-term nursing care. In most states, including my state - I practice in Abilene, Texas - an individual is limited to $2,313 in income in order to qualify for Medicaid. However, even if your income exceeds that amount, you can still qualify if you take the right steps.
A "qualified income trust" (also known as a QIT or a "Miller" trust) is a special type of trust document that - when properly utilized - can help you to qualify for Medicaid benefits, even if your income exceeds the so-called "income cap." The process for setting up and operating the trust is fairly simple.
First, a trust needs to be drafted that is consistent with the law in your state. Each state has different requirements for the trust, so you should be careful if you are using a more "generalized" form. Your best bet - as always - is to use a qualified lawyer to draw up the document for you. It costs money in the short-term, but it can also save a lot of money down the road.
Second, once the document is drafted, you will need to open up an account at a bank or institution. It can be the same bank where the funds are currently being deposited. From that point forward, the best practice is almost always to ensure that all of the funds are either going directly to the long-term care facility or into the trust. A common situation is for any social security retirement or disability checks to be paid to the nursing home, while pensions and other types of income are paid into the trust.
From the trust, the money could flow in several directions. First, some of the money can be spent on what is known as the personal needs allowance. This provides a small amount of money for the Medicaid patient to secure things such as hair styling, vending machine snacks, or birthday cards. Second, the money could flow to the resident's spouse, should the spouse's income otherwise be below the required level of maintenance that is allowed by the State. Other categories exist as well - including categories for payment of insurance premiums. Ultimately, however, the balance will be paid out as a part of the patient's cost share with the nursing facility.
Setting up a Miller trust does not involve a great number of details, but you do need to make sure you get those details right. If you have questions about Miller trusts or how they work, feel free to reach out to me.
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