Medicaid benefits can be very important for those who need long-term care, but applicants must have a limited income in order to qualify. New Jersey residents in such situations may fear that they will be ineligible for Medicaid, because their income is too high. However, there are means for a person to retain income in a way that still allows them to qualify for Medicaid.
A qualified income trust serves as an estate planning vehicle in which a person’s income can be placed. A trustee (who cannot be the person seeking Medicaid benefits) for the QIT will open a bank account for the trust. Income that is placed in a QIT is not counted when determining whether a person is eligible for Medicaid. QITs are a type of irrevocable trust.
A QIT must meet certain conditions and must be approved of and overseen by a Medicaid eligibility determining agency. Only the Medicaid applicant’s income can be placed in the QIT, not the income of anyone else. Income must be placed into the QIT the month is received. The QIT can only hold income, not other sources of revenue, such as money earned from selling personal assets. The QIT must be funded in the same month that the individual is seeking Medicaid eligibility. There are other conditions as well.
In the end, QITs are complex legal documents. This post only provides a brief overview of them, and should not be relied upon as legal advice. Those wishing to establish one should understand what is required to execute a QIT that meets their needs. A person who earns an income that is greater than the limit set by Medicaid may be ineligible for benefits. Therefore, any means in which income will not be counted when a person applies for Medicaid can be very useful. Many people are planning on utilizing Medicaid to fund their long-term care needs, so it is important for them to understand all their options for doing so.
