If you anticipate that someday you or a family member will need coverage for costs such as nursing home expenses, you should take a look at your income. You may not earn enough to pay for your long term care but your income is too high to qualify for Medicaid. This problem is why the state of Florida allows its residents to set up a qualified income trust.
The state of Florida provides some background on qualified income trusts and what you must do to set one up.
Defining a qualified income trust
Some people have to spend down their assets to qualify for Medicaid. If this is not possible or you wish to avoid losing too much money, a qualified income trust allows you to hold your excess income so that you may become eligible for Medicaid. A QIT allows you to receive a monthly allowance from the trust. If applicable, a spouse may also receive a maintenance allowance from the trust.
What a qualified income trust requires
Florida law requires that a trust meet certain standards in order to qualify as a QIT. First, the trust must be irrevocable. Second, the trust must contain your income and no other assets. Also, the trust documents must have your signature or your spouse’s. In the event you need someone to act on your behalf or your spouse’s behalf, state law allows a surrogate to sign the documents at your request.
Finally, your QIT must stipulate that the state of Florida will receive all of the remaining funds in the trust once you have died, up to the amount your trust has paid in Medicaid benefits.
How a qualified income trust operates
It is important to maintain a QIT so that it will continue to work for you. As long as you require Medicaid services, you must deposit amounts into your QIT each month. These deposits cannot be amounts for a past month, nor can you deposit amounts for the future. Failing to deposit enough in the trust means you will not receive your Medicaid payment.