
Medicaid can be a critical component when planning for long-term care, especially in Florida. However, qualifying for Medicaid isn't always straightforward, particularly when an individual’s monthly income exceeds the allowable limit. This is where a Qualified Income Trust (QIT), also known as a Miller Trust, comes into play. If you're concerned about eligibility or want to explore how a QIT can fit into your Florida estate planning, this guide will walk you through the essentials.
What is a Qualified Income Trust (Miller Trust)?
A Qualified Income Trust is a legal tool used to help individuals qualify for Medicaid when their income exceeds the allowable limit. In Florida, the Medicaid income cap is currently set at $2,829 per month. If an individual’s monthly income from all sources—such as Social Security benefits, mandatory IRA distributions, alimony, or other income—exceeds this limit, they may be ineligible for Medicaid benefits. This is where a QIT becomes necessary.
How Does a QIT Work?
A QIT is specifically designed for individuals whose income exceeds Medicaid’s limit but who still need Medicaid assistance for long-term care. The individual or their legally authorized representative (such as a spouse, guardian, or agent with a properly drafted durable power of attorney) sets up the trust. Income exceeding the Medicaid limit is deposited into the QIT each month.
By doing this, the individual’s countable income is reduced to meet Medicaid eligibility requirements. The income in the trust is then used to pay for the individual’s care, such as nursing home fees or assisted living expenses. Medicaid covers the remainder of the costs beyond the individual’s contribution from the trust.
Why is a Durable Power of Attorney Important?
To establish a QIT, the person creating the trust must have the legal authority to do so. This authority can be granted through a durable power of attorney (DPOA), but it must include specific language authorizing the creation of a QIT. This highlights the importance of consulting with a qualified estate planning attorney to ensure the DPOA is correctly drafted. Without this authority, an individual may be unable to set up the trust, thereby risking their Medicaid eligibility.
What Can the Funds in a QIT Be Used For?
Funds deposited into a QIT must be used appropriately. The primary use is for paying medical and long-term care expenses, such as nursing home or assisted living fees. However, if the individual qualifies for Medicaid’s home healthcare benefits instead of residing in a facility, the funds can be applied to in-home medical expenses or healthcare-related needs.
There are also provisions for small allowances within the trust:
Personal Allowance:Â An individual can receive up to $160 per month as a personal allowance from the trust.
Spousal Allowance:Â If the individual is married, their spouse may also receive a portion of the income from the QIT.
Working closely with a Florida estate planning lawyer is essential to manage the QIT correctly and ensure compliance with Medicaid rules.
Why Is a QIT Necessary?
With the cost of long-term care in Florida averaging around $10,000 per month, individuals with income just above Medicaid’s limit (e.g., $3,000–$4,000 per month) often face a significant financial shortfall. Even though they may not qualify for Medicaid based solely on income, their income may still be insufficient to cover the full cost of care.
For example, if an individual earns $3,500 or $4,000 a month, they would be ineligible for Medicaid without a QIT. However, this income is still far below what is needed to cover a $10,000 monthly assisted living fee. By establishing a QIT, they can deposit the excess income into the trust, thereby qualifying for Medicaid to cover the remaining expenses.
Asset Considerations
It’s important to note that QITs address income eligibility, not asset eligibility. To qualify for Medicaid, an individual must meet both income and asset requirements. Assets like bank accounts, investments, and real estate holdings must be below Medicaid’s asset threshold. A Florida estate planning attorney can help you navigate these requirements and create a comprehensive plan to protect your assets while ensuring Medicaid eligibility.
What Happens to the Funds in a QIT After Death?
If an individual with a QIT passes away, any remaining funds in the trust are first used to repay Medicaid for the benefits provided. After Medicaid’s claim is settled, any leftover funds can be distributed to the individual’s beneficiaries, as outlined in their will or estate plan.
This process underscores the importance of consulting with an experienced lawyer to ensure your QIT is set up correctly and aligns with your overall estate plan.
How Can a Florida Estate Planning Attorney Help?
Navigating Medicaid’s rules and establishing a QIT can be complex. Consulting with a qualified Florida estate planning attorney or elder law attorney ensures that your QIT is structured correctly and that your durable power of attorney includes the necessary language. Proper planning not only secures your eligibility for Medicaid but also helps protect your assets for your loved ones.
The non-stuffy team of atCause Law Office has extensive experience and success in Florida estate planning, Medicaid planning, and elder law. If you or a loved one needs assistance with establishing a Qualified Income Trust or any other aspect of your Florida estate plan, we are here to help. Contact us today at 727-477-2255Â to schedule a consultation. Let us guide you through the process to protect your assets and secure the care you need!
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