Nursing home costs can be extraordinary, especially in the long term. Medicare does not pay for long-term care, but you may be able to get assistance from Medicaid. Medicaid, however, has income and asset requirements that you must qualify for in order to obtain their financial help.
There is a means to qualifying for Medicaid and the much needed government benefits to help with nursing home costs. A qualified income trust, is a form of irrevocable trust created to house income for a married couple or individual’s that exceeds the limits set by Medicaid to qualify for assistance. An attorney specializing in estate planning can assist you in setting up a QIT.
The QIT does not work the same as a special needs trust or living trust. The only reason to create a qualified income trust is to create a legal way to remain eligible for Medicaid when your income is too great to qualify but you don’t have enough means to be able to pay for the nursing home care.
Income placed in a qualified income trust can only be used to pay for medical costs, fees from banks and a small amount for personal expenses. The balance of the money in the trust must be used to pay your portion of long term care. When you pass away, the balance of the money left in the QIT is used to pay Medicaid for a portion of the cost of your care.
An attorney can help write the trust to be sure the requirements of the qualified income trust are met. The details of the trust are as follows:
- It must be created as an irrevocable trust, meaning it cannot be changed.
- Only a person’s income can be in the trust.
- Any income source that causes the individual to become not eligible for medicaid assistance must be included. The income can be received by the individual and then placed into the trust.
- A reversion clause is set in the trust that says when the trust beneficiary dies, the balance of the funds in the trust go to the state to repay any assistance that Medicaid provided.
- The trustee needs to pay a monthly allowance to the beneficiary, an additional minimum monthly allowance if necessary, and the cost of providing medical assistance to the individual from any funds left in the trust.
It is important that you work with an experienced estate planning attorney to correctly set up the qualified income trust. A QIT allows you to shelter income that exceeds the amount to qualify for help from Medicaid, while allowing a small monthly personal spending allowance.
The QIT only protects your income from the need to qualify for Medicaid. Your other assets need to be addressed as well to protect them without worrying about jeopardizing your eligibility to use Medicaid. Working with an experienced lawyer who specializes in estate planning can help you attain the desired objectives. Long term care in a nursing home can be financially devastating. Consult an experienced elder law attorney Roseville CA recommends to help you protect your income and assets.
Thanks to our friends and contributors from Yee Law Group for their insight into elder care.