If you are considering a Medicaid plan in Florida, you may already know about a Qualified Income Trust. However, you may not know the details of how it can help you. We will discuss how Qualified Income Trusts help lower your income to qualify you for Medicaid benefits.
What is a Qualified Income Trust?
A Qualified Income Trust comes under many different names. It can be called a QIT, a Miller Trust, or a Medicaid Income Trust. However, they all mean the same thing. It is simply a legal way to reduce your income to qualify for Medicaid benefits.
Why would I need a Qualified Income Trust?
A “Qualified Income Trust” or QIT is a Medicaid planning tool available in the state of Florida to help you qualify for long-term care Medicaid benefits. You may be wondering how you will pay for long term care. If you want your long-term care covered by Medicaid, you need to qualify first. To qualify under the Medicaid guidelines, you must be “low income.” When your income is too high you may need to spend down your assets or income to qualify.
A QIT is a legal way to “spend down” your income and can help you qualify for benefits under Medicaid. It is best to speak with an elder law attorney if you are considering a QIT. Here is more information about Florida guidelines for a low-income individual.
What kind of income is considered under Florida Medicaid guidelines?
Asking about what kinds of income are considered is an incredibly good question. You should know what is and is not included for any Medicaid calculations, so you do not make any mistakes. Income that the government considers when calculating your Medicaid eligibility include:
- Social Security
- IRA Distributions
- Real Estate Income
- Veteran’s Benefits
- Stock and Bond Dividends
- Interest Payments
Any monthly income that exceeds the Medicaid income cap would need to be put into a QIT. For example, your long-term care costs $5,000.00 per month. If the Medicaid Income Cap is $2,500.00, you have an excess of $2,500.00 per month. You would need to place over $2500.00 into a Qualified Income Trust or some other spend down vehicle to qualify for Medicaid.
This Sounds Like a Great Deal, Let’s Do It!
We understand that it is extremely exciting to find out about QIT’s, but there are some limitations you need to know.
First, you cannot use your QIT fund for anything other than medical expenses. A QIT works as a healthcare savings account. This means you cannot pay for things like your rent or utilities from your QIT. If you do, you might lose your Medicaid benefits.
Second, you must fund the QIT each month with your excess income. For as long as you need long-term care, your excess income is deposited into the QIT, so you continue to qualify for Medicaid.
Third, a durable power of attorney is required to create a QIT should you become incapacitated. This is so that someone is continuing to care for you.
Finally, upon death, the QIT funds may go to Medicaid or the state to cover any remainder costs of your long-term care. Since most QIT’s only have monthly income, there is almost nothing for the state to take. However, if there is anything left over, the Trustee must pay back Medicaid from your QIT dollar for dollar.
Starting sooner rather than later is the best practice when it comes to Medicaid planning. By being proactive, you can avoid costly mistakes. Take a look at your financial situation and consider setting up a Qualified Income Trust. Always use a trusted and experienced elder law attorney when creating a QIT.
Meet with The Law Office of Lori Vella to draft your Medicaid plan today.
Lori Vella is an Estate Planning and Business Attorney. She works virtually throughout Florida and New York, but has her home office in Tampa, Florida. She is mom to a little boy which ignited the passion for helping other families. She and her son enjoy car rides, playgrounds and taking mini-adventures. They also have an organic garden that surprisingly yields vegetables. Lori considers herself well-versed in Seinfeld and welcomes any trivia!
Disclaimer: The Law Office of Lori Vella’s website contains general information directed to Florida residents. This firm does not intend to give legal advice through its pages and/or blog. If you need legal advice, we encourage you to find an attorney licensed in your state. This language on this website does not create an attorney-client relationship between you and this firm.