Establishing a Qualified Income Trust (QIT) Often Called a Miller Trust to Qualify for Medicaid
By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Medicaid Attorney
The State of New Jersey has adopted the use of a Qualified Income Trust (QIT) to qualify for Medicaid Long Term Care. Now regardless of your income (practically speaking, there are limits which I’ll discuss later on) you can get the care you need at home or at an assisted living residence through Medicaid. This is a really positive development that unfortunately many people still don’t know about. But now you do, though let me forewarn you, a QIT is a major pain in the *** (you fill in the blanks) to deal with when you’re income is too high. Let me explain.
So what is a Miller Trust? Well, it’s a trust that is created to hold the income but not the resources of a Medicaid beneficiary. Miller Trusts are known by an acronym called a Qualifying Income Trust (commonly referred to as a Q.I.T.). As a trust, it must meet the formalities of a trust under New Jersey law, namely have a creator (called a settlor or grantor) which can be the Medicaid applicant or his/her spouse or child, Power of Attorney or guardian, a trustee, a person or entity that manages and administers the trust, and a beneficiary (the Medicaid applicant). A trust must also be in writing and be funded with at least $1.00 in order to have a bank set it up.
Here in New Jersey, if a Medicaid applicant has income that exceeds the strict Medicaid income eligibility limit (it changes annually but in 2018 it is approximately $2,205 (+/-), then an individual can place the excess income into a Miller Trust by directing or depositing that excess income (or all of their monthly income regardless of the source) into the trust after it is received. This redeposit or placement of the income into the Miller Trust will cause it to be disregarded by Medicaid as if it does not exist in the applicant’s name and the individual will then be eligible for Medicaid benefits.
But there are a number of strict federal and state regulations that must be met for the life of the trust in order for the trust to remain compliant and the individual Medicaid eligible, but the result is worth it. These requirements are explained in greater detail later on this page. The trust also requires setting up a special bank account and depositing income into the account. This account can never have more than $2,000 in it at the end of the calendar month.
I believe the best way to understand something complex is to illustrate it by example, so let’s use an example on a QIT:
Say I’m applying for home based Medicaid assistance because I can’t live alone. I’m a fall risk and confined to a wheelchair or bed most of the day. I have income of $3,000 between social security and a pension. The maximum income I can declare is $2,205 a month in order to qualify for the state Medicaid program. In this example, I can place $796 of my income into a Miller Trust and now I’m below $2,205 and therefore, qualify for Medicaid eligibility. The income I placed into the Trust won’t collect against me.
Even though I now qualify for Medicaid because I’ve lowered my income with a Miller Trust, I still have to spend down my income each month based on a priority of expenditures mandated by the state. That list is too detailed to set forth here but suffice it to say we can help you navigate it.
Checks deposited into a QIT bank account must include the entire dollar amount of that income source, (for example, a social security check for $1,000 cannot be broken into $500 inside the trust and $500 outside the trust), the entire social security check must be deposited inside or outside of the trust.
Understanding the Use of a Miller Trust Commonly
Known as a Qualified Income Trust
Medicaid eligibility for home based and assisted living MLTSS using a QIT will be approved after the following conditions are satisfied:
- The Medicaid application is filed and successfully processed by the County Board of Social Services CWA;
- The QIT is drafted, signed and funded and approved by the CWA to ensure compliance with federal regulations.
- A Medicaid eligibility examination (Pre-Admission Screening (PAS)), for an institutional level of care, is conducted and approved by the Division of Aging Services.
- QITs may be established for an individual by a family member or a lawyer. Here at Hanlon Niemann & Wright, we prepare many QITs and counsel hundreds of families each year on their use and the details of compliance.
All QIT documents must include the following provisions:
- The QIT must contain only the income of the individual; no one else.
- The QIT must not contain resources such as money from the sale of real or personal property or money from a savings account;
- The QIT must be irrevocable;
- The QIT must have a trustee to manage the administration of the trust and expenditures from the trust must be disbursed in compliance with federal and state law;
- New Jersey must be named the first and primary beneficiary of any remaining funds up to the amount paid for Medicaid benefits upon the death of the Medicaid recipient;
- Income deposited in the QIT can only be used for the specific Post-Eligibility Treatment of Income and to pay for the Medicaid beneficiary’s cost share.
The order of deductions that must be paid by the trustee from the trust following Medicaid approval is outlined in federal regulations they are as follows:
- A Personal Needs Allowance or Maintenance Needs Allowance (based on your living arrangement);
- A Spousal and family member maintenance allowances where applicable;
- An Allowance for unpaid but approved medical expenses;
- Health insurance premiums;
- Cost share contributions for room and board or community residential expenses for home or assisted living care.
The trustee may be compensated if there is money remaining in the QIT bank account after all Post-Eligibility expenses and cost share are paid. The trustee fee may be up to 6% of the income deposited into the QIT bank account each month. All post-eligibility expenses and cost share expenses must be paid by the trustee whether the income is inside or outside the QIT bank account. If there is a balance left after these expenses are paid, it must remain in the QIT bank account.
How Hanlon Niemann & Wright Can Help You Create, Fund and Administer Your Miller Trust
We’ve written and assisted thousands of families with Medicaid eligibility questions, issues and applications. We know the requirements and the details of Miller Trusts. We’ve created a system from beginning to end to help you become “Miller Trust” compliant, including a unique relationship with Sun Bank next door who assists our clients with immediate hassle free account openings. Unless you create your Miller Trust before applying for Medicaid, many counties will reject your application. Even if you’ve filed or are contemplating filing your own Medicaid application without our assistance, we can still help you with correctly setting up a Qualifying Income Trust. All it takes is a phone call to me today.
Contact Fredrick P. Niemann, Esq. on any questions concerning eligibility for NJ Medicaid or applying for Medicaid approval.
Call toll free (855) 376-5291 or email him at firstname.lastname@example.org to set up an office consultation at your convenience.