Do you have aging parents or loved one's in Delaware that will need help paying for their nursing care? If so, Medicaid will pay for their nursing care costs but you must qualify, In this blog we'll show you what you can do to qualify financially if your income is too high for the state limits.
Delaware is an "income cap" state for the purpose of qualifying for Medicaid benefits. In order to qualify for Medicaid in Delaware, you must have no more than a set amount of total monthly "GROSS" income. If your total monthly "gross" income is above the state limit [currently set at $1,853.], then in order to qualify for Medicaid benefits you must set up a "Qualified Income Trust' also know as a "Miller Trust"
A Qualified Income Trust [QIT] also known as a “Miller Trust”, is a special purpose trust set up and used in conjunction with a bank account to hold the "excess monthly income" that a person earns, over and above the state limit or "cap".
Let’s first give a quick definition of what a trust is;
A trust is a legal document that specifies a fiduciary arrangement which allows a third party, known as a trustee, to manage assets on behalf of the person creating the trust and/or a beneficiary. Trusts can be arranged in many ways and can specify exactly how the assets are to be used.
What is an income cap?
When applying for Medicaid benefits an individual must meet all of the eligibility guidelines. One of which is income. Some states have set a “cap” on the amount of income a person may have in order to qualify, [Delaware has their cap set at $1,853]. These states do have a provision though that will allow a Medicaid applicant receiving an income that exceeds the monthly limit allowed by Medicaid to become eligible if they place their income in a QIT.
Who can establish a QIT?
Any individual, of any age, who is otherwise eligible for Medicaid may establish an income trust. The individual does not have to be disabled, however, an income trust can be used only when the Medicaid applicant is residing in a living arrangement where long-term care services can be provided [a nursing home, assisted living facility or receiving at-home care].
How does it work?
The individual establishes a checking account titled in the name of the trust, their income is then directly deposited into the trust. Because the income is deposited into the trust, Medicaid does not count it when determining income eligibility [the income then belongs to the trust]. The individual will then meet the income guidelines and the trust will help them to qualify for Medicaid benefits. With an income trust, most, if not all of the money that comes through the trust goes right back out to pay Medicaid for part of the cost of care.
What will the trust pay for?
The income deposited into the trust will be used to determine the individuals Patient Pay Liability, which is the amount they are required to pay towards the cost of their care. However, before paying the Patient Pay Liability the income can be used for other things such as;
- Community spouse – if the individual is married it can be used towards the amount of money their spouse requires for monthly expenses also known as a Minimum Monthly Maintenance Needs Allowance [MMMNA]. If the spouses income is less than their monthly bills then the amount they fall short can be deducted from this trust account each month. Example – John enters a nursing home, his income is $2,500. His wife Mary has an income of only $700 but her monthly expenses are $1,400. They can use $700 each month from his income to make up the shortfall of income for Mary.
- Medicare premiums
- Medical costs not covered by Medicaid.
What are the guidelines regarding a QIT?
- The account must be opened with a $0 balance or, in some states, a minimal amount required by the financial institution to open the account.
- The trust can only be composed of the individuals income and may not be co-mingles with a spouse, family member or the Trustee.
- Any income that is considered an excluded source by Medicaid should not be assigned to the trust. Examples of excluded income include income tax refunds, certain annuity payments, Agent Orange payments, VA Aid and Attendance and housebound allowances, VA reduced pension, and vocational rehabilitation.
- Income and interest earned by the trust, if any, can accumulate and will not be counted as a resource.
- The individual must be clinically eligible for Medicaid and qualify in other financial aspects such as resource limits.
- The QIT can only be established by the individual or, in the case of an incapacitated individual, there Power of Attorney or legal Guardian.
- The trust must be irrevocable [meaning that it cannot be modified or terminated].
- The trust must have a Trustee assigned to manage the trust and ensure that the deposits and payments are being made properly [Trustee must keep excellent records]. [Trustee cannot be the individual applying for Medicaid].
- All of the income from any one source must be redirected, you cannot split an income. Example – if you receive $1,200 from social security and $1,500 from a pension, all of one of the sources income must be deposited to the trust.
- The QIT must be established by the last day of the month that eligibility is needed and funded, by the last day of each month that benefits are needed.
- The state in which you are applying for Medicaid benefits must be listed as the first beneficiary.
A QIT doesn't shelter income for the Medicaid applicant, but without such an income trust, the applicant wouldn't qualify for Medicaid and would therefore be responsible for the cost of their care which in some states may be as high as $116,000 per year.
Medicaid Pus, P.C serves all communities in Pennsylvania, New Jersey Delaware and Maryland
If you have questions regarding a QIT or a Medicaid application for you or a loved one, give us a call at 855.471.6771 or send an Email to: [email protected]
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