In this edition of the Medicaid Myth-Information series, we’re going to talk about money again. In Part 1, we looked at misconceptions about Medicaid’s requirements to spend down assets in order to qualify. In Part 2, we looked at how the language in a Durable Power of Attorney can affect that document’s ability to give you the powers you need, especially the power to help an elderly loved one qualify for Medicaid.
Now, in Part 3, we’re going to look at misconceptions about income. If you or someone you love needs nursing home care and you want Medicaid to pick up the tab, what do you do if you have too much income to qualify?
It’s important to note that income and assets aren’t the same. Medicaid treats them differently. Assets are things you own—a home, a car, stocks and bonds, or an IRA, just to name a few. Income is a stream of revenue, be it a pension, a stock dividend, other payments that you receive on a regular basis.
In 2019, the gross income cap to qualify for Medicaid is $2,313 per month. Many people assume that if an elderly loved one’s income exceeds this amount, there’s nothing you can do. Fortunately, that’s not the case.
In Florida, the fix is an asset protection planning tool called the Qualified Income Trust or QIT. If you’re working without the guidance of a knowledgeable elder law attorney, you may not even know that a QIT is an option. But it is an option—and a powerful one—that gives you the ability to qualify your loved one for Medicaid by protecting those income streams so they can be used for his or her care.
The first step in establishing a QIT happens long before the Medicaid qualification process. It happens when your elderly loved one drafts his or her Durable Power of Attorney. Let’s say that your elderly mother has a Durable Power of Attorney. The language in that document must give the agent the specific authority to establish a QIT for her if one is needed.
If her Durable Power of Attorney doesn’t have that language, Federal law states that her spouse has the legal authority to establish a QIT for her. If there’s no spouse, things get complicated. An attorney will have to petition the court for permission to have someone (possibly you) create and establish the QIT. This adds unnecessary time and cost to an already difficult process.
It’s vital to have the right language in a QIT because the money in the trust can’t be used for just anything. If an attorney isn’t familiar with the requirements for QITs, it’s easy to get the language wrong. Typically, income in a QIT can only go to pay the long-term care facility. However, in some case, provisions can be made for the QIT to pay unreimbursed medical expenses or to divert money to a spouse.
So, if you’re told by a nursing home staff member that your loved one’s income is too high to qualify for Medicaid, and there’s no option but to pay out of pocket for his or her care, know that you have other options. Your best bet, however, is to start your planning early. Get a Durable Power of Attorney with the right language and start putting your asset protection plans in place now. It’s best to do this with a qualified elder law attorney who specializes in Medicaid Planning and Asset Protection Planning. That’s what we do here at the Flammia Elder Law Firm. We would be honored to help you.