Another Word about QITs – Part 3
The past 2 weeks my blog posts have covered QITs.  Last week I told you about a case in which the trustee initially transferred the correct amount to the QIT, the Medicaid recipient’s entire monthly Social Security, however, when that amount increased because of the cost of living adjustment, the trustee did not make the adjustment to transfer the higher amount into the QIT bank account.  The caseworker approved the case but warned that if the mistake was not corrected it would result in a denial of Medicaid benefits when it came up for renewal in a year. In another case in another county, the caseworker decided not to let the mistake go. The trustee put the correct amount into the QIT for the first couple of months but then subtracted $50 from the Social Security amount received before transferring the rest into the QIT account. As I explained last week, all income must go to the nursing home with limited exceptions. So why did the trustee subtract $50? That’s because under Medicaid rules recipients can keep enough of their income to cover any health insurance premiums such as a Medicare supplement, commonly referred to as a Medigap policy. The recipient is also entitled to keep $50 each
Another Word About QITs – Part 2
In my post last week I revisited a Medicaid topic that I am frequently asked about - qualified income trusts.  An applicant’s income that exceeds Medicaid’s strict monthly income cap ($2382 in 2021) must deposit some of that income into a QIT before then sending it where it must go according to Medicaid rules.  That’s the very general overview, however, the State of New Jersey has imposed  very specific rules that must be followed or else - meaning a mistake can cost you Medicaid eligibility. Enough income must pass through the QIT so that the income that is left totals under the income cap, however, the income can’t be split. All of a source of income must be deposited into the QIT. For example, if you receive $1000 from a pension and $1500 from Social Security you can’t simply deposit $250 from the pension or the Social Security into the QIT to drop the amount down to $2250 which falls under the income cap. You must deposit the entire pension income or the entire Social Security amount received into the QIT. When I set up the QIT and review it with the proposed trustee, I give very detailed instructions on how the trust is to be used. We try
Another Word about QITs
I last wrote about qualified income trusts (QITs)last September but I want to revisit the topic because of 2 recent applications in our office in which the trustee failed to follow the very specific requirements that the State of New Jersey has imposed. It has often happened that people call our office inquiring about how to set up a QIT and it turns out that they are a year or more away from actually being able to qualify for Medicaid. They call because they have heard or read that a QIT is necessary. It’s obviously something that comes up very quickly when searching for information about Medicaid on the internet. The QIT is a critical piece to achieving and maintaining Medicaid eligibility, however, it also one of the aspects to Medicaid that is very easy to mess up ,simply because the State has made the mechanics of the trust and managing it so technical. Before we get to that let’s review the basics. Medicaid has a strict income cap ($2382 in 2021). If an applicant’s income exceeds that number, Medicaid eligibility can only be achieved if a QIT is used to pass thru some of the income before sending it to either the facility providing care or
Divorce and Medicaid – Part 3
In last week’s second part of my post, I laid out some basic strategies for couples who, while still legally married and living together, view themselves as separated or divorced. Unfortunately in the eyes of Medicaid you aren’t divorced unless you’ve got the Judgment of Divorce to prove it. When I tell a healthy “community spouse” that his/her assets are countable for Medicaid purposes I hear the disappointment and sometimes the anger, however, in many cases this doesn’t necessarily mean a bad outcome. That’s because of the way the asset and income rules work for a married couples. There often are opportunities to protect what the community spouse considers to be his or her assets alone and sometimes we can protect much more than that. Last week I pointed out that paying off a home mortgage or buying a new home will protect the assets. I recognize, however, that selling and then buying a new home is not practical and may be overwhelming to an already stressed community spouse. A Medicaid compliant annuity is another option. As I stated last week the community spouse’s income is not counted for purposes of eligibility. This gives us an opportunity to convert assets to income. As I have written about in previous blog
Divorce and Medicaid – Part 2
Last week I wrote about the recent calls we’ve received regarding couples in unhappy marriages where one spouse now needs care.  Even though they may have kept their finances separate for many years, under Medicaid rules the healthy spouse’s assets will be counted as well as the ill spouse’s assets when determining eligibility. When we tell callers this they often are angry and/or disappointed, however, it doesn’t necessarily mean the assets all must be spent down. Let’s first go over the basic rules. In the case of a married couple the healthy or what is referred to as the community spouse can keep the home he/she lives in no matter the value and 1/2 of the countable assets up to a limit of $130,380 in 2021. With respect to the income, Medicaid only considers the Medicaid applicant’s income for eligibility purposes. The community spouse’s income does not factor into the equation. Understanding these basic rules gives us opportunities to protect more than the minimum for the healthy spouse while qualifying the ill spouse for benefits. For example, if the couple has a mortgage, paying down that mortgage converts countable assets to non countable assets, preserving them for the community spouse. Selling the home and buying another primary residence is
Divorce and Medicaid – Part 1
Divorce rates in America have steadily risen for years and much has been written about it.  There are, however, many more couples in unhappy marriages who for varied reasons did not go the divorce route.  For some, it may have been about being more comfortable with the life they know vs. the uncertainty of a new life.  For others it may have been about the disappointment or anger of family and friends.  For still others it may have come down to finances.  Splitting the marital assets to pay for two separate households is  more expensive than for one and then there are the legal fees and court costs. We see many of these couples call us when one of them needs long term care and the realization hits that the cost of that care could impact both of them. Often the healthy spouse calling our office talks in terms similar to an ex-spouse as far as what is owned by each spouse. In their minds there are no longer marital assets. Except that this really isn’t true if they are still married. If they don’t have long term care insurance, then they will need to use those assets until they are spent down to the level of assets needed to