Grandma Needs Medicaid But Wait,….Her Income Is Too High!

Imagine this scenario for a moment…Grandma has been admitted to a nursing home where she will likely stay for the remainder of her life. You’ve heard what “they” say about the cost of long-term care in the Nursing Home. Your immediate thought: “Grandma has no money…. How are we going to pay for this?”

In talking with the Business Office or Social Worker at the facility, you learn that Medicaid can pay a significant portion of Grandma’s nursing home bill as long as she doesn’t have “too many” assets. You think to yourself, “No problem, Grandma only has $1,500 in the bank, she will have no problem getting Medicaid.”

You immediately apply by submitting an application on her behalf. After a week or so, you get a notice from the State of Florida, Department of Children and Families telling you Grandma’s income is too high to qualify. You’re not sure what to do, so you do nothing. After a few more weeks you get another notice informing you Grandma’s application for Medicaid has been denied. The reason, “The applicant’s income too high for the program you are seeking.” Huh? What does that mean?

The State of Florida is what we refer to as an “Income Cap” state. This means that the state has an income limit for people seeking Medicaid. Florida’s Medicaid rules are very inflexible. An individual whose income exceeds the maximum allowable amount per month (even if only by one dollar) is not eligible for Medicaid.

But its not all bad news…the state does recognize that there are many people like Grandma who may have very few assets but high income. For these people (and Grandma), Federal Law authorizes the use of a Qualified Income Trust (QIT) to deal with the excess income to make Grandma eligible for Medicaid. A Qualified Income Trust? What is that? How does it work?

A QIT is a special type of Trust that must be prepared by an attorney. It deals only with the applicant’s income and must be set up and “funded” before Medicaid approval. Any income deposited into the QIT is excluded from the Medicaid eligibility determination. The QIT is like any other trust in that it is made up of three parts, Grantor, Trustee, Beneficiary. So how then does it work?

The way it works is … Grandma or her legal representative will execute the Trust document. Grandma would be the Grantor and sole life-beneficiary of the Trust. Grandma’s representative [often a trusted loved one] will serve as the Trustee of the QIT. The named Trustee will then take the fully executed QIT document to a bank to open a checking account, which must be titled in the name of the QIT. Bank representatives will need to see and copy the document as well as the Trustee’s photo ID.

We’ve got the QIT open at the bank, now what? Going forward, Grandma will continue to receive her monthly income as normal. Grandma’s Trustee will pay/deposit into the Trust from Grandma’s primary checking account the amount of her income that is over the limit or all of her income if she wishes. Now that funds are in the QIT, the Trustee is limited as to how he/she can use the funds.

The trustee can only make permissible payments on Grandma’s behalf. Some of the payments that can be made from the QIT include Grandma’s monthly patient responsibility to the nursing home, Grandma’s monthly personal needs allowance, Grandma’s monthly supplemental insurance premium and, if applicable, a community spouse allowance. The income deposited into the QIT is excluded from the eligibility determination; however, it is not excluded from the patient responsibility calculation.

“Grandma has a revocable living trust, we can just use that, right?” Unfortunately, the answer to this question is “No.” A QIT is a very specific type of irrevocable trust. As mentioned, the rule is very strict on the use of a QIT. The funds deposited or held in a QIT can only be used for certain permissible expenses.

There is no other way to “fix” the high-income problem. The use of a QIT is very complicated and requires careful attention to detail. The key thing to remember is that Medicaid will allow Grandma to have income over the limit so long as she has a QIT, her income is paid into it and then paid/disbursed from the QIT according to Medicaid’s rules.

Are you looking for help with a QIT? Allow our Elder Law Specialists to guide you in this somewhat complicated area.

By Jonathan Kinsella


The Season of Thankfulness: Just Now or Year Round?

This has always been one of my favorite times of the year. Weather is cooling off, even here in Florida, and the humidity is dropping. In Tampa Bay we made it through another summer and almost past another hurricane season. Students are settled back in school and snowbirds are beginning to return. (Yes, the traffic will get heavier, but that’s a small price to pay.) Best of all, it’s Thanksgiving season.

No matter how had the retail industry tries, they aren’t that successful at commercializing Thanksgiving. True, a lot of extra food is sold and Black Friday is now squeezed to the night before, but overall the holiday hasn’t been destroyed. It’s still Thanksgiving.

As I take time to reflect on the year and make my list of things to be thankful for, I realize that my list is long. It includes each of my family and friends, my home, that I have a roof over my head, and my health. I am particularly grateful for my profession as a lawyer in elder law.

I’m grateful for everyone here at Hill Law Group. Not only do they work hard to make sure our clients are well served, they make me look good! I am also grateful for those who’ve worked with us and moved on. Each of them has contributed to who we are today.

I am particularly glad that this list of gratitude includes you!
You, our clients, without whom we wouldn’t be here. Even more, you enrich our days.
You, our clients’ families and loved ones, who make it possible for us to serve some of the most vulnerable people in our society. We see how you care.
You, our referrals, who have trusted us enough to refer others to our firm. Goodness, you have made a difference! It is truly a humbling honor to have someone referred to us.
You, our colleagues in other specialties and industries, who serve our clients in different ways. Nothing is more frustrating than not having a place to refer someone who needs help. You make a difference for us. We are so grateful you are out there and we are able to confidently share your names.
This past year I learned about businesses that share gratitude during their meetings. It only takes a few minutes and they claimed to enjoy great benefits from the practice. So, at Hill Law Group we took it to the next level. We jumped on the wagon and now share our grateful thoughts in our meetings. Already, I believe we’re all just a little bit happier and maybe even a little more effective. I would most certainly recommend this practice for any business or individual.

As my thankfulness list gets longer, my stresses fade and worries weaken. Life feels better and I am more able to focus on the task at hand. So, I’ve determined that I will continue focusing on gratefulness long after this wonderful season is over. I hope you will do the same!


Entering A Long-Term Care Facility?


It seems that almost every day we are confronted with the need to sign some sort of agreement or click through some sort of acceptance process. Each time you download an app you are required to. Accepting an airline or cruise boarding pass is often also the contract. We cannot get away from them. They are a part of our everyday life.

But, that doesn’t mean we should blindly sign agreements, especially long-term care agreements. Often we hear from client or family members about signing entrance agreements for long term care facilities – after they’ve signed. The typical story is that an employee took information, printed out a set of documents, marked them up a little, and highlighted where the person should sign. The person asked some questions and then signed without reading even one line.

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Make Tax Time Your Identity Theft Prevention Time

A few years ago the unthinkable happened to me. I went to my long-time accountant to complete my tax return and together we filed the return online. We finished up and chatted a few minutes. While I was still there, a message came back from the IRS that my return had been rejected. The message stated a return had already been filed in my name and that a refund had been issued. What? Someone scammed me, an attorney? And the IRS? You’re kidding!

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The Season for Gratitude

Already Thanksgiving is upon us! Yes, it is a truly American holiday. But, one of the things I love about Thanksgiving is that it doesn’t matter what your belief system is or where in the world you came from, you can enter in. It is all about gratitude and a little gratitude is good for us all.

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