Medicaid planning: the qualified income trust

On Behalf of | Jul 19, 2021 | Long Term Care Planning |

Nursing home care is expensive, period. For many people, it’s not something they or their family can afford for a significant length of time. Fortunately, Medicaid may be available as an option to handle those costs, but the eligibility requirements are rigorous.

Medicaid income limit

Unlike Medicare, which is an entitlement, Medicaid is only available to those who qualify for it. The requirements include being 65 years old or having a disability, citizenship and asset limits. Income limits are separate from all of these and each must be met in order to qualify.

For 2021, the federal income limits were set at $2,382 per month for an individual and $4,764 for a couple. The key question is whether a person’s income is countable or not – because not all income is countable. The rules regarding countability can be complex but, if your countable income is below the limit, you can meet the income requirement.

Qualified income trust

Not everyone will meet the Medicaid income limit. Some people will wind up in a gray area, where their income is too high to qualify but not sufficient to pay for nursing home care long-term. The qualified income trust (QIT) is designed specifically for this situation.

The individual’s excess income is placed into an irrevocable trust. That income can then be used only for specific purposes, such as paying medical bills. But once the trust is established, the excess income is no longer counted for purposes of Medicaid eligibility, permitting them to meet this requirement. With all of the hoops you may have to jump through to qualify for Medicaid, it can be an intimidating process. For sound Medicaid planning, seek the assistance of a knowledgeable and experienced professional.