The challenges of preserving a legacy while on Medicaid

On Behalf of | Apr 15, 2022 | Long Term Care Planning |

Estate planning is a constantly evolving process, as family and individual needs change over time. No matter how well individuals may plan, there are events or health concerns that may arise to put a strain on these financial resources. An elderly person who realizes that a costly medical procedure or move to a long-term health facility can compromise their financial security may panic about how to manage their bills.

For many older residents in Texas, being able to protect the estate without losing their Medicaid eligibility is a goal that requires careful planning and informed decision making. Many fear that they will have to give up the family home or otherwise divest to qualify for Medicaid. Understanding their options can help seniors in Dallas and surrounding areas to plan ahead to secure a solid financial future.

Medicaid qualifications

Every state has different qualifications for Medicaid, so the minimum qualifying income level will vary as well as the options individuals may have if their assets exceed that limit. Although the federal income limit for individuals is $2,523 per month, in Texas, Medicaid applicants can spend down excess income to qualify.

Some assets are exempt once a couple spends down to a protected resource amount (PRA), and they may qualify for nursing home assistance while retaining a limit of:

  • $3,090 per month, excluding household expenses and personal needs
  • $123,600 in total assets

For seniors who still do not qualify at the time that they or their spouse requires long-term care because they are receiving monthly pension or Social Security payments, it is still possible to find ways of qualifying without losing surplus income.

The qualified income trust

A Qualified Income Trust (QIT) protects an individual’s surplus income without jeopardizing their Medicaid eligibility. A Miller Trust is one type of QIT in which income in excess of a set limit will go into the trust so as to maintain the recipient’s Medicaid eligibility. In Texas, any income that goes into the recipient’s account over the monthly cap of $2,250 automatically goes into the trust.

Out of this trust, funds can be used to pay for the Medicaid recipient’s personal needs as well as the minimum monthly maintenance needs allowance (MMMNA) of their community spouse. When setting up a Miller Trust, it is important to remember that it is an irrevocable trust, and once set up on behalf of the Medicaid recipient, funds cannot be diverted or split to another account.

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