Could a QIT help you qualify for Medicaid?

Though no one wants him- or herself or a family member to need long-term care, it is a real possibility for anyone. Even if you or your spouse is healthy now, a serious illness or injury could happen at any time and present the need for extended care. Because that possibility does exist, it may be prudent to start now to determine how to pay for those often-lofty care expenses.

Fortunately, certain benefits programs can help cover the costs of long-term care. For example, Florida residents often use Medicaid to pay for their or their loved one’s needed care. However, receiving these benefits hinges on being qualified, which means meeting certain income eligibility requirements.

What if you have too much income?

If you or your loved one has too much countable income to qualify for Medicaid, you do not have to feel out of luck. You may be able to make some arrangements that help you qualify. Making these plans well ahead of time could prevent penalties imposed by Medicaid for reducing income within five years of applying. One way to plan ahead is by using a qualified income trust.

What is a QIT?

If you have too much monthly income to qualify for Medicaid, you could place the excess income into the QIT and essentially lower your income to the qualifying amount. A QIT is a trust that allows one to only use the income placed in the trust for a specific purpose, and you must declare that purpose — in this case, medical expenses — at the time of the trust’s creation. However, when creating a QIT for this purpose, you will likely have to name Medicaid as the beneficiary of the trust.

You will also need to appoint a trusted person to act as the trustee of the QIT. This person will be responsible for writing the checks or otherwise withdrawing money from the QIT to cover medical expenses and care for you or your loved one. The trustee will also ensure placement of the excess funds in the QIT each month.

Is this right for you?

Though QITs can be a useful way to plan ahead for Medicaid eligibility, it is not the best choice for everyone. Fortunately, other options exist for Medicaid planning, so you may want to take your time and gain reliable information on QITs and other planning options so that you can find the best option for your needs and wishes.